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Thursday, August 27, 2009

'Buy a home', but don't buy Toll stock 'yet': analyst

Toll Bros. has been selling more homes, but at lower prices, notes Merrill H. Ross, homebuilder analyst at BGB Securities in Washington, DC. ADD: Toll sold a net 837 units, worth $448 million, in the quarter, vs 812 units, worth $470 million, a year ago. Quarterly report here.

By pricing homes at realistically lower rates, Toll "is capturing market share of luxury home buyers," but they're still "few and far between," added Ross. "We believe that sales will continue to be depressed through 2010." ("We are reducing incentives and raising prices at selected communities," ceo Bruce Toll said in the report.)

Maybe Toll "can build luxury homes at a profit at some point in 2010" if orders keep rising, Ross added. But she adds there's still a lot of unsold homes to unload before Toll can boost prices enough to make a priofit.

Her conclusion: "Buy a Home, Not the Stock for Now." Toll stock at $23 a share "is unsustainable," Ross writes, because, once you discount land-impairment charges and deferred-tax credits, "Toll is building homes at break-even profits". She recommends buying the stock if it falls to $17.
Posted by Joseph N. DiStefano @ 10:24 AM  Permalink | 2 comments
Comments   
  • 0 like this / 0 don't   •   Posted 10:30 AM, 08/27/2009
    Tool, er Toll, should use all that money he got from the Bush tax breaks to create jobs so more people can afford to buy homes.
    — MikeP
  • 0 like this / 0 don't   •   Posted 3:41 PM, 08/27/2009
    ...and he is. He is reinvesting in the Philly newspapers with new money to help stabilize the business.
    — J.Sco


2 comments
About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column in the Philadelphia Inquirer. Joe has been a member of Bloomberg LP’s New York Finance Team, wrote the book “Comcasted,” taught writing at St. Joseph’s University, and studied economics and history at Penn. Reach Joe at 215-854-5194 and JoeD@phillynews.com
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