Toll Brothers’s (NYSE:TOL) Q2 CY2026: Beats On Revenue

Homebuilding company Toll Brothers (NYSE:TOL) reported Q2 CY2026 results beating Wall Street’s revenue expectations, but sales fell by 9.7% year on year to $2.66 billion. Its GAAP profit of $2.97 per share was 0.9% above analysts’ consensus estimates.

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Karl K. Mistry, chief executive officer, stated: “Toll Brothers delivered solid third quarter results in a challenging market. We exceeded the midpoint of our guidance with $2.65 billion of home sales revenues, delivering 2,662 homes at an average price of $996,400. Our adjusted gross margin was 25.6%, or 35 basis points above guidance, and we earned $2.97 per diluted share. We also grew net signed contracts by 5% year over year.

Company Overview

Started by two brothers who started by building and selling just one home in Pennsylvania, today Toll Brothers (NYSE:TOL) is a luxury homebuilder across the United States.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Regrettably, Toll Brothers’s sales grew at a tepid 5.3% compounded annual growth rate over the last five years. This fell short of our benchmark for the industrials sector and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Toll Brothers’s recent performance shows its demand has slowed as its annualized revenue growth of 1.1% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs. We also note many other Home Builders businesses have faced declining sales because of cyclical headwinds. While Toll Brothers grew slower than we’d like, it did do better than its peers.

We can better understand the company’s revenue dynamics by analyzing its backlog, or the value of its outstanding orders that have not yet been executed or delivered. Toll Brothers’s backlog reached $6.24 billion in the latest quarter and averaged 8.1% year-on-year declines over the last two years. Because this number is lower than its revenue growth, we can see the company hasn’t secured enough new orders to maintain its growth rate in the future.

This quarter, Toll Brothers’s revenue fell by 9.7% year on year to $2.66 billion but beat Wall Street’s estimates by 1.6%.

Looking ahead, sell-side analysts expect revenue to grow 2.2% over the next 12 months, similar to its two-year rate. Although this projection suggests its newer products and services will spur better top-line performance, it is still below average for the sector.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Toll Brothers has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 16.5%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Analyzing the trend in its profitability, Toll Brothers’s operating margin rose by 1.3 percentage points over the last five years, as its sales growth gave it operating leverage. Its expansion was impressive, especially when considering the cycle turned in the wrong direction and most of its Home Builders peers observed plummeting revenue and margins.

This quarter, Toll Brothers generated an operating margin profit margin of 13.5%, down 3.9 percentage points year on year. Since Toll Brothers’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.

Toll Brothers’s EPS grew at 19.1% compounded annual growth rate over the last five years, higher than its 5.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Toll Brothers’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Toll Brothers’s operating margin declined this quarter but expanded by 1.3 percentage points over the last five years. Its share count also shrank by 24.8%, and these factors together are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Toll Brothers, its two-year annual EPS declines of 7.3% mark a reversal from its (seemingly) healthy five-year trend. We hope Toll Brothers can return to earnings growth in the future.

In Q2, Toll Brothers reported EPS of $2.97, down from $3.73 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects Toll Brothers’s full-year EPS to grow 11.1% from $12.46 to $13.85.

Key Takeaways from Toll Brothers’s Q2 Results

It was encouraging to see Toll Brothers beat analysts’ revenue expectations this quarter. Overall, this print had some key positives. The market seemed to be hoping for more, and the stock traded down 1.5% to $140.94 immediately after reporting.

Should you buy the stock or not? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).