High Mortgage Rates Taking a Toll in the Housing Market

BATS:TOL   Toll Brothers, Inc.
Comments on Quantitative Analysis Sector Comparison
  • Homebuilder sentiment dropped to a five-month low in September as higher rates push prospective buyers out of the market
  • Revenues from land sales are little.

Comments on Business
  • Continuous hike in interest rates and high-cost environment are concerning.
  • There was a reduce in headcount, causing SG&A spending to be reduced.

KPI’s driving Revenue and Earnings
  • Home deliveries expected to decrease from united delivered in the prior-year quarter.
  • Adjusted home sales gross margin is expected to decline from the year-ago period.
  • SG&A estimated to rise from the year-ago period.
  • For fiscal 2023, home deliveries are anticipated to decline from fiscal 2022.

By extrapolating nine months ended data, company is highly unable to meet the targeted home deliveries for the quarter and fiscal year of 2023.

  • Earnings not meeting targeted home deliveries.

Trade Structure
Dec 75/65 Bear Put

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