What Toll Brothers (TOL)'s Soft Q4 Earnings and Lower 2026 Guidance Mean For Shareholders

• Toll Brothers recently reported mixed fourth-quarter 2025 results, with revenue rising to US$3,423.4 million while net income slipped to US$446.72 million and earnings per share came in below analyst expectations amid a softer demand backdrop and a 15% decline in backlog.
• At the same time, the builder is pressing ahead with new luxury communities such as Wilder Ranch in Colorado, Rivercrest in Nevada, and expanded offerings in Washington, underscoring its focus on affluent buyers even as it guides to lower 2026 home deliveries of 10,300 to 10,700 units.
• We’ll now examine how the earnings shortfall and cautious 2026 delivery guidance may alter Toll Brothers’ previously balanced investment narrative.

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Toll Brothers Investment Narrative Recap

To own Toll Brothers, you need to believe its focus on affluent buyers and high-priced homes can offset cyclical softness and margin pressure. The latest quarter’s earnings miss, softer demand signals, and 15% backlog decline sharpen the near term catalyst around how 2026 deliveries and margins hold up, while reinforcing the key risk that weakening luxury demand and higher incentives could pressure profitability. Management’s guidance for lower 2026 deliveries modestly increases that risk, but does not fundamentally change the long term thesis.

Against this backdrop, the company’s ongoing expansion into new luxury communities such as Wilder Ranch in Colorado is particularly relevant. It highlights that Toll Brothers is still adding higher end product even as it guides to fewer 2026 deliveries, which could matter for how investors weigh community growth against rising incentives and a softer backlog.

Yet while community growth might appeal to some, the growing reliance on spec homes and higher incentives is something investors should be aware of as...

Read the full narrative on Toll Brothers (it's free!)

Toll Brothers' narrative projects $13.1 billion revenue and $1.7 billion earnings by 2028. This requires 6.3% yearly revenue growth and an earnings increase of about $0.3 billion from $1.4 billion today.

Uncover how Toll Brothers' forecasts yield a $152.40 fair value, a 10% upside to its current price.

Exploring Other Perspectives

Ten members of the Simply Wall St Community place Toll Brothers’ fair value between US$91 and US$197, showing just how far apart opinions can be. Before you pick a side, remember that rising incentives and margin pressure could be as important to future performance as any headline delivery guidance.

Explore 10 other fair value estimates on Toll Brothers - why the stock might be worth 34% less than the current price!

Build Your Own Toll Brothers Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Toll Brothers research is our analysis highlighting 2 key rewards that could impact your investment decision.
• Our free Toll Brothers research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Toll Brothers' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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