Toll Brothers, Inc. (NYSE: TOL), a leading luxury homebuilder, has recently reported mixed financial results. Despite facing challenges in earnings per share (EPS) and net income, the company saw an increase in revenue and home sales revenue. However, the decline in net signed contract value and backlog value poses potential future revenue challenges.

Here are the key insights from TOL's financial performance:

- Earnings per Share (EPS) fell short of estimates, coming in at $4.58 compared to the expected $4.87, indicating a slight decrease from the previous year.

- Revenue exceeded expectations, reaching approximately $3.42 billion, driven by a 5% increase in home sales revenue year-over-year.

- The backlog value decreased to $5.5 billion from $6.5 billion, suggesting potential challenges in future revenue.

Overview

Toll Brothers, Inc. (NYSE: TOL) is renowned for its high-end residential properties and has cemented its position as a leader in the luxury housing market. Competing against giants like Lennar Corporation and D.R. Horton, TOL's recent financial outcomes have shown a mix of strengths and weaknesses.

Financial Performance

On December 8, 2025, TOL reported an EPS of $4.58, missing the anticipated $4.87. This shortfall reflects a minor decline from the previous year's fourth quarter, where EPS stood at $4.63. Net income also saw a downturn, decreasing to $446.7 million from $475.4 million. Pre-tax income followed a similar trend, dropping to $593 million from $621.1 million.

Despite these challenges, TOL's revenue for the period was a bright spot, totaling approximately $3.42 billion, which surpassed the forecasted $3.32 billion. This revenue boost was primarily due to a 5% increase in home sales revenue year-over-year, which amounted to $3.41 billion from $3.26 billion. The number of homes delivered also saw a slight uptick to 3,443 from 3,431.

However, TOL encountered hurdles with its net signed contract value, which decreased to $2.53 billion from $2.66 billion, alongside a drop in contracted homes to 2,598 from 2,658. The backlog value at the end of the fourth quarter was $5.5 billion, down from $6.5 billion, indicating potential future revenue challenges.

Market Valuation Metrics

TOL's financial metrics shed light on its market valuation. The company's price-to-earnings (P/E) ratio stands at approximately 9.88, with a price-to-sales ratio of about 1.21. Its enterprise value to sales ratio is around 1.41, while the enterprise value to operating cash flow ratio is approximately 15.43. TOL's debt-to-equity ratio is relatively low at 0.38, and it maintains a strong current ratio of about 4.14, indicating its capability to cover short-term liabilities.