Did Toll Brothers beat earnings in Q1 FY2026?

Yes, Toll Brothers reported EPS of $2.19, up 25% from $1.75 in Q1 FY2025. The company beat its adjusted gross margin guidance by 25 bps (26.5% vs 26.25% guided) and SG&A guidance by 30 bps (13.9% vs 14.2% guided).

What is Toll Brothers' guidance for FY2026?

Toll Brothers maintained full-year guidance: 10,300-10,700 home deliveries at an average price of $970K-$990K, with 26% adjusted gross margin and community count of 480-490 at year-end.

How did the stock react to Toll Brothers earnings?

TOL shares fell approximately 1% on earnings day, trading down to $163.83 from a previous close of $166.12, despite the earnings beat.

Toll Brothers (TOL)·Q1 2026 Earnings Summary

Toll Brothers Q1 FY2026: EPS Surges 25% as Luxury Homebuilder Beats on Margins

February 17, 2026 · by Fintool AI Agent

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Toll Brothers delivered a strong Q1 FY2026, with EPS jumping 25% year-over-year to $2.19 as the luxury homebuilder beat guidance on both margins and expenses. Home sales revenue was essentially flat at $1.85 billion despite 5% fewer deliveries, as average selling prices rose 6% to $977,000. The company maintained its full-year guidance, citing confidence in its affluent customer base and broad geographic footprint.

Did Toll Brothers Beat Earnings?

Yes — handily on profitability metrics.

Metric	Q1 FY2026	Guidance	Q1 FY2025	YoY Change
Diluted EPS	$2.19	—	$1.75	+25%
Home Sales Revenue	$1.85B	—	$1.84B	Flat
Homes Delivered	1,899	—	1,991	-5%
Average Price	$977K	—	$925K	+6%
Adj. Gross Margin	26.5%	26.25%	26.9%	-40 bps
SG&A % of Revenue	13.9%	14.2%	13.1%	+80 bps
Net Income	$210.9M	—	$177.7M	+19%

The beat drivers:

Margin outperformance: Adjusted gross margin of 26.5% beat guidance of 26.25% by 25 bps
Expense discipline: SG&A of 13.9% beat guidance of 14.2% by 30 bps
Price over volume: 6% higher ASP offset 5% lower unit deliveries
Other income boost: $72M in other income vs $2.5M YoY, driven by apartment portfolio sale

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How Did the Stock React?

Muted reaction despite the beat. TOL opened at $166.55 and closed at $163.83, down approximately 1% on earnings day. The stock had rallied significantly heading into results — up 14% over the prior 50 days and 26% over the past 200 days — suggesting expectations were already elevated.

Metric	Value
Prior Close	$166.12
Earnings Day Close	$163.83
Change	-1.4%
52-Week High	$168.36
52-Week Low	$86.67
Market Cap	$15.6B

What's already priced in: The stock trades at roughly 12.8x FY2026E EPS ($12.84 consensus*), a premium to historical averages for homebuilders, reflecting Toll's luxury positioning and consistent execution.

*Values retrieved from S&P Global

What Did Management Guide?

Full-year guidance maintained, signaling confidence despite a softer backlog.

Metric	Q2 FY2026 Guidance	Full Year FY2026 Guidance
Deliveries	2,400-2,500 units	10,300-10,700 units
Avg. Price	$975K-$985K	$970K-$990K
Adj. Gross Margin	25.5%	26.0%
SG&A %	10.7%	10.25%
Community Count	455	480-490
Other Income	—	$130M
Tax Rate	26.0%	25.5%

CEO Doug Yearley emphasized: "Our business model and strategy have allowed us to perform well in the current environment, giving us the confidence to maintain our full year guidance."

Consensus estimates for FY2026: Revenue of ~$10.4B and EPS of ~$12.84*

*Values retrieved from S&P Global

What Changed From Last Quarter?

Key shifts to watch:

Backlog compression: Backlog fell to $6.02B (5,051 homes) from $6.94B (6,312 homes) YoY — a 13% decline in value and 20% decline in units. However, backlog ASP rose to $1.19M from $1.10M, reflecting the move upmarket.
Geographic mix shift: Pacific region surged 37% YoY to $393M on higher ASPs ($1.55M), while South and Mountain regions declined.
Apartment Living exit: The company substantially completed sale of ~half its multi-family portfolio to Kennedy Wilson for ~$330M net proceeds, with plans to fully exit apartment development over coming years.
Cancellation rates: Stable at 5.4% of contracts signed (vs 5.8% YoY) and 2.8% of beginning backlog (vs 2.4% YoY).

Geographic Segment Breakdown

Segment Breakdown

Region	Q1 FY26 Revenue	Q1 FY25 Revenue	YoY Change	Units	ASP
Pacific	$393M	$287M	+37%	254	$1.55M
Mountain	$476M	$557M	-15%	537	$886K
South	$470M	$506M	-7%	578	$812K
North	$278M	$255M	+9%	278	$1.00M
Mid-Atlantic	$238M	$236M	+1%	252	$945K

The Pacific story: California, Oregon, and Washington markets delivered standout results with ASPs averaging $1.55M — 60% above the company average. This offset weakness in the Mountain region (Arizona, Colorado, Nevada, Utah, Idaho), where volumes fell 19%.

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Balance Sheet & Capital Allocation

Toll Brothers ended Q1 with a strong financial position:

Metric	Q1 FY2026	Q4 FY2025	Q1 FY2025
Cash	$1.20B	$1.26B	$575M
Debt-to-Capital	24.4%	26.0%	26.0%
Net Debt-to-Capital	14.2%	15.3%	21.1%
Book Value/Share	$88.73	$87.25	—
Stockholders' Equity	$8.41B	$8.27B	$7.80B

Capital deployment in Q1:

Share repurchases: 0.3M shares at $146.75 avg price for $50.5M total
Dividend: $0.25 per share quarterly dividend paid Jan 23, 2026
Land investment: $424M spent on ~2,189 lots
Credit facility: Extended to 2031 and increased to $2.38B

Land Position & Community Count

The company controls approximately 75,000 lots — sufficient for 8-10% annual community count growth through FY2026 and beyond.

Metric	Q1 FY2026	Q4 FY2025	Q1 FY2025
Lots Owned	33,594	—	33,871
Lots Optioned	41,396	—	43,843
Total Controlled	74,990	76,100	77,714
Selling Communities	445	446	406

Community count grew 10% YoY (445 vs 406), supporting the company's growth trajectory.

Key Quotes From Management

CEO Doug Yearley highlighted the company's positioning:

"We are pleased with our first quarter results, as we met or exceeded guidance across nearly all metrics."

"We continue to be very pleased with our focus on the luxury market and its more affluent customer base. We also continue to benefit from our broad geographic footprint, the widest variety of home offerings and price points in the industry, and our balanced mix of build-to-order and spec homes."

"Last month, Toll Brothers was named the #1 Most Admired Home Builder in Fortune magazine's 2026 list of the World's Most Admired Companies, the ninth year the Company has achieved this honor."

Risks & Concerns

Backlog deterioration: The 13% YoY decline in backlog value and 20% decline in units could pressure future quarters if contract activity doesn't rebound.
Mortgage rate sensitivity: While the luxury buyer is less rate-sensitive, persistently elevated rates could weigh on demand, particularly in the $800K-$1M segment.
Geographic concentration risk: The Pacific region's outperformance masks weakness in Mountain and South regions, which together represent 60% of units.
SG&A leverage compression: SG&A rose 80 bps YoY to 13.9% despite flat revenue, suggesting fixed cost pressures. Management guides 10.25% for full year as deliveries ramp.

What's Next for TOL?

Near-term catalysts:

Q2 FY2026 earnings (expected May 2026)
Spring selling season contract trends
Mortgage rate trajectory

Earnings call: February 18, 2026 at 8:30 AM ET — management will provide color on demand trends and regional performance.

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Analysis based on Toll Brothers 8-K filed February 17, 2026. Earnings call scheduled for February 18, 2026.