TOL - Examining Potential Pressure Point In TOL Stock Ahead Of Earnings Report; Little Margin For Error

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TOL - Examining Potential Pressure Point In TOL Stock Ahead Of Earnings Report; Little Margin For Error

Truist Securities

as well, between 2,650 and 3,000+ units. These estimates, when combined with the TOL community count guide, are implying absorption

rates will rise very modestly on a y/y basis and increase about 25% or so on a sequential basis. In years past, the sequential step up in

absorptions between the first and second quarter has at times been 50% or greater; however, we think there is a case to be made that

it will be closer to the low teens range. This translates to a ~2.0 per month absorption rate, versus the 2.2 projected by the Street. We

are modeling a sequential step up in absorption rates similar to last year (~13% growth), which also yields a similar y/y absorption rate

change to 1Q26 (high single digit decline), given a second straight year of mid-spring selling season macro headline risk.

High-End Broader New Home Sales Not Suggesting Significant Market Improvement. According to the US Census Bureau, there

were 23K homes sold (includes contract signed) over $600K in February and March 2026, versus the 25K units sold in February and

March 2025. Investors should note that these are relatively small numbers, so the Bureau's round-to-the-nearest-thousand reporting

can throw off y/y changes meaningfully. Nonetheless, this is still a decline. We think TOL will continue to gain share of this segment of

the market in the long run, but this market performance certainly does not support roughly flat underlying demand needed to maintain

TOL absorption rates y/y, in our view.

Not Anticipating Any Extra Help From a Community Count Beat. A smaller, but still relevant, factor in this is the community count.