February 21, 2023

Markets were quite weak on Tuesday as the S&P 500 fell 2.0% and Toronto fell 1.3%. For the reasons I explained earlier today – the market is taking notice of higher long-term interest rates.

Given this decline, almost everything on our list was down today.

Toll Brothers was down 2.5% (so not unusual given the whole market was down). But then Toll Brothers released earnings after the close and the stock rose 2.85% after-hours. (Hurray!)

Toll is destined to report strong earnings (I’m not sure it will be growth but at least solid earnings) for a couple more quarters as it delivers its backlog of houses that customers contracted for in the past year. But its contracts for this quarter were down 50% and had been down 60% in the two quarters before that. So at some point Toll is going report sharply lower year-over-year earnings. BUT with the stock so cheap, maybe that is already priced in. AND they once again expressed a lot of optimism. Overall, this one is likely to continue to be volatile and although it is cheap I don’t see much reason to expect it to gain much if any in the near term. There is a conference call tomorrow morning and that may push the stock in one direction or the other.

Note that the “February 18” comment just below this one was meant to be uploaded on Saturday and I found it in a browser tab today, waiting for me to press the “publish” button. that’s why it is out of date order.


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