Toll Brothers shares rise as outlook brightens
On Wednesday August 12, 2009, 8:21 am EDT
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NEW YORK (Reuters) - Luxury home builder Toll Brothers Inc (NYSE:TOL - News) said on Wednesday it expects to report a 42 percent drop in third-quarter homebuilding revenue, but said net signed contracts increased in the quarter and said home buyers are less concerned about prices.
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Symbol Price Change
TOL 20.48 0.00
{"s" : "tol","k" : "c10,l10,p20,t10","o" : "","j" : ""} Shares rose 7.4 percent in premarket trading to $22, a level they last reached in January.
Preliminary results for the quarter ended July 31 showed homebuilding revenue of $461.3 million and an order backlog of $930.7 million.
Toll's cancellation rate was 8.5 percent in the quarter, down from 19.4 percent a year earlier.
Horsham, Pennsylvania-based Toll said in a statement net signed contracts rose 3 percent to 837 units, although the dollar value declined. The company said this was the first time in 16 quarters that net signed contracts had exceeded the year-ago figures.
It also noted that signed contracts improved from its April quarter, even though they typically decline.
Many markets are improving and buyers appear to have more confidence.
"Price is no longer the overwhelmingly dominant factor," Chief Executive Robert Toll said in a statement.
The lower cancellation rate and CEO's comments about prices "support our view that the company is gaining sufficient share to more than offset weakness among high-end buyers," UBS analyst David Goldberg said.
Toll shares are up about 62 percent from their November lows, including Wednesday's advance. But a broader index of home construction stocks has more than doubled in that time frame.
Toll's relative underperformance against the index shows investors' concern about the luxury end of the housing market, analysts have said.
The company plans to release full third-quarter results on August 27th.
(Reporting by Nick Zieminski, with additional reporting by Ajay Kamalakaran, editing by Gerald E. McCormick)
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