Bearish stock to watch: Toll Brothers Inc (NYSE: TOL)

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Toll Brothers Inc (NYSE: TOL) stock fell over 3.5% on 10th December, 2019 (As of 11:13 am GMT-5; Source: Google finance) after the company posted weak bottom-line for the fourth quarter of FY 20. Net income fell to $202.3 million, in the fourth quarter ended Oct. 31, from $311 million, a year earlier. TOL has over $3 billion of liquidity through cash and undrawn bank credit facilities with no public or bank debt maturities in the next 24 months at the starting of fiscal 2020. First quarter Adjusted Home Sales Gross Margin is expected to be approximately 21.25%, which is projected to be the low point of the fiscal year. First quarter SG&A, as a percentage of home sales revenues, is expected to be of approximately 13.5%.  First quarter SG&A includes about $10 million of G&A expense that is not expected to occur in subsequent quarters of fiscal 2020. First quarter other income, income from unconsolidated entities, and land sales gross profit is expected to be of approximately $15 million. First quarter tax rate is expected to be of approximately 26.5%. FYE 2020 community count growth is expected to be of approximately 10%. TOL in the fourth quarter of FY 20 has reported the adjusted earnings per share of $1.41, while reported 3.1 percent fall in the adjusted revenue to $2.38 billion in the fourth quarter of FY 20

Additionally, in fiscal 2019 the company had repurchased $234 million of stock, and paid dividends of total $0.44 per share. The Company repurchased approximately 1.85 million shares of its common stock during the quarter at an average price of $35.66 per share for an aggregate purchase price of approximately $66 million.

Toll expects home deliveries for the first quarter between 1,650 and 1,850 units, while analysts were estimating 1,595 units. For the first quarter, the company expects deliveries to be at an average price expected to be in between $800,000 and $820,000.

Meanwhile, few months ago, Toll had announced its intention to expand into South Carolina’s Charleston, Greenville and Myrtle Beach markets through its acquisition of Sabal Homes, whose properties start below $300,000. The company had old 2,672 homes in the fourth quarter, which is down from 2,710 a year ago, while the orders have increased 18.4%. However, it sold 624 units in the southern region, comprising Florida, Georgia, North Carolina, South Carolina and Texas, compared to 449 units a year ago.

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