Toll Brothers, Inc. (NYSE:TOL) Maintains Strong Position Despite Market Challenges

• RBC Capital maintains an "Outperform" rating for Toll Brothers, Inc. (NYSE:TOL), adjusting the price target from $139 to $133.
• Despite a decrease in earnings and revenue projections, Toll Brothers increases its quarterly dividend, showcasing financial stability.
• The luxury homebuilder faces challenges from high mortgage rates and the Federal Reserve's rate outlook but remains a significant player in the luxury housing market.

Toll Brothers, Inc. (NYSE:TOL) is a prominent homebuilder specializing in luxury homes. The company is known for its high-end residential properties and operates primarily in the United States. As a leader in the luxury housing market, Toll Brothers competes with other major homebuilders like PulteGroup and D.R. Horton. These companies also face challenges in the current economic climate, including high mortgage rates and affordability issues.

On May 20, 2025, RBC Capital maintained its "Outperform" rating for Toll Brothers, with the stock priced at $105.73. Despite the challenges in the housing market, RBC Capital's analyst Mike Dahl adjusted the price target from $139 to $133, reflecting a cautious yet optimistic outlook. The stock has seen a 15% increase over the past month, although it remains down 15% year-to-date.

Toll Brothers is set to release its second-quarter earnings results, with analysts expecting earnings of $2.86 per share, down from $4.75 per share last year. The projected quarterly revenue is $2.49 billion, a decrease from $2.84 billion a year ago. Despite these declines, the company recently increased its quarterly dividend from 23 cents to 25 cents per share, indicating confidence in its financial stability.

The company has exceeded earnings expectations in three of the past four quarters, with a fiscal year 2025 EPS consensus of $13.72. Revenue is projected to slightly decrease to $10.71 billion. Toll Brothers faces the challenge of maintaining its gross margins while affordability in core markets is stretched. The Federal Reserve's rate outlook continues to impact demand in the luxury housing market, affecting new order activity.

Investors are also considering Toll Brothers' dividends, with an annual yield of 0.93%. To earn $500 monthly from dividends, an investment of approximately $643,560, or around 6,000 shares, would be required. The stock's current price is $105.30, with a market capitalization of approximately $10.47 billion. Despite the challenges, Toll Brothers remains a key player in the luxury homebuilding sector.