Toll Brothers Inc.: Higher-End Buyer Keeping Activity Afloat; Margin Volatility & Lot Pressure Ahead

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Toll Brothers Inc.: Higher-End Buyer Keeping Activity Afloat; Margin Volatility & Lot Pressure Ahead

Equity Research

U.S. Homebuilding & Building Products

21 May 2026

Toll Brothers Inc.

Higher-End Buyer Keeping Activity

Afloat; Margin Volatility & Lot

TOL UNDERWEIGHTPressure Ahead

Unchanged

Deposit trends flat y/y in first three weeks of May is roughly U.S. Homebuilding & POSITIVE Building Products

Unchangedin-line with expectations. Volatile sequential margins driven

by mix swings & setting a low bar for guidance Price Target USD 115.00 Unchanged

overshadowing slow and steady margin compression, with Price (20-May-26) USD 136.31

Potential Upside/Downside -15.6%more lot inflation pressure ahead. Remain UW.

Source: Bloomberg, Barclays Research

Reiterate UW: Our 2H EPS estimates are little changed, with a much lower 3Q and higher 4Q

Market Cap (USD mn) 12909

given margin mix dynamics, although the longer term direction of margins continues to tread

Shares Outstanding (mn) 94.71

lower. As lot inflation catches up, with TOL now spending over $200k/lot acquisition (up $40k on

Free Float (%) 99.26

an annual basis over the past two years, with flat home prices), we expect TOL to see greater lot

52 Wk Avg Daily Volume (mn) 1.4

cost pressure than other builders over the next 12-24 months. Our PT is unchanged, as we

Dividend Yield (%) 0.76

forecast ROTE to drift towards the low-double digits beyond 2026. QTD commentary (flat

Return on Equity TTM (%) 15.68

deposits per community y/y) is consistent across homebuyer price spectrums (i.e. not just

Current BVPS (USD) 90.51

unique to luxury), and we expect that recently rising rates will impact the more elastic Source: Bloomberg

homebuyer that emerges following the peak of spring housing demand. Relative to other