Whoops – Homebuilders Getting Hammered

Toll Brother’s missed earnings expectations. The stock is down 4%. Contracts were down 5% from Q3 and backlog was down 8%. This is in a housing market which is being supported by near-record low mortgage rates. Interestingly, despite a huge increase in reported average price per unit, Toll’s gross margin – revenues less cost of revenues – were flat. One would think that, ceteris paribus, Toll’s gross margin should be soaring.

This post was published at Investment Research Dynamics on December 10, 2014.