Summary:
- Toll Brothers (NYSE:TOL) sank 5% on Wednesday after the company beat Wall Street earnings expectations but missed on guidance.
- Our analysis is that the stock is ready to move higher based on its market cycles and positive momentum.
Toll Brothers reported earnings per share of $1.41 and total revenue of $2.4 billion, compared to analyst estimates of $1.26 and $2.2 billion. Looking forward, while management projects home deliveries to be higher compared to a year ago, they expect adjusted gross margins to be lower.
In any case, CEO Douglas Yearly noted that,
“Through the first six weeks of the current quarter, we have seen even stronger demand than the order growth of fiscal 2019’s fourth quarter.”
Our approach to stock analysis uses market cycles to project price action. Our analysis is that we are at the tail end of the corrective phase of the current cycle. We expect TOL to move higher along with the next cycle. Our target is $44, based in part on positive momentum.
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