2Q26 Preview: We See More Upside Than Downside Potential Despite Tough Macro

研报英文原文证据摘录

2Q26 Preview: We See More Upside Than Downside Potential Despite Tough Macro

certainty due to the Iran conflict with a stock

market that is near all-time highs, which is positive for TOL’s luxury customers. FY Oct 2025A 2026E 2027E

Q1 1,840.78 1,854.99A 1,801.71

■ 2Q26 orders and gross margin. We currently forecast +7% y/y order growth in 2Q26 Q2 2,706.45 2,439.49 2,615.41 on +9% y/y community growth and -2% y/y absorption. We see some potential

for upside given the upbeat commentary from March quarter-end builders and Q3 2,880.98 2,831.61 3,044.74RESEARCH

TOL’s easy, -20% y/y, absorption comp. We believe TOL should meet the 25.5% Q4 3,414.00 3,349.63 3,556.37

adjusted gross margin guide. Builders in our coverage generally met or exceeded FY Sales 10,842.20 10,475.72 11,018.22

margin guides in 1Q26. Buyer demand has been relatively elastic within a volume Diluted EPS (Adjusted)

band which we believe has helped builders forecast quarter-out margin relatively FY Oct 2025A 2026E 2027E

well. We do note that $500K+ new home sales, as measured by the Census, are

down -15% y/y through March vs. total new home sales down -5%. However, TOL's Q1 1.75 2.19A 1.61

correlation to the national data is low, 36% over the last 20 quarters. Q2 3.50 2.54 2.90

Q3 3.73 3.48 3.87

■ 3Q26 and FY26 gross margin guide. Margins will need to move higher in 2H26 in

order to hit TOL’s 26.0% guide, which TOL attributes to more deliveries from the Q4 4.58 4.63 4.87

higher margin North and Pacific Northwest segments. 2Q26 guides from the March- FY EPS 13.49 12.79 13.21

quarter end builders were mixed, D.R. Horton (DHI, Buy $188 PT) guided slightly FY P/E 10.0x 10.6x 10.2x

up and PulteGroup (PHM, Neutral) guided slightly down and talked to the low end

of the full year range.