Toll Brothers’ geographic results
In its fiscal 2Q16 earnings release, Toll Brothers (TOL) gave a geographic breakdown of its different markets.
The map above shows the segments in Toll Brothers’ Traditional Homebuilding Sector. More specifically, the geographic segments are broken down as follows:
- North: Connecticut, Illinois, Massachusetts, Michigan, Minnesota, New Jersey, and New York
- Mid-Atlantic: Delaware, Maryland, Pennsylvania, and Virginia
- South: Florida, North Carolina, and Texas
- West: Arizona, California, Colorado, Nevada, and Washington
Deliveries in the North segment, not counting the City Living New York City developments, fell on a year-over-year basis in terms of units. The ASP (average selling price) rose from $630,000 to $705,000.
However, contract signings fell from 379 units to 327 units. The ASP for signed contracts rose 13.2% to $704,500.
Deliveries in the Mid-Atlantic segment fell to 300 units from 303 units. However, they modestly rose in dollars due to an increase in ASP from $618,800 to $622,000.
Contracts rose in unit terms but fell in dollar terms as the ASP fell from $624,000 to $614,800.
In the South, deliveries fell in unit terms, and the rise in ASP from $747,000 to 805,000 wasn’t enough to increase deliveries in dollar terms.
Contract signings rose in units to 367 from 356 a year ago. The ASP fell 1.5%. It looks like the fall in oil prices is beginning to affect demand in Texas.
Deliveries rose in both unit and dollar terms in the West. However, the ASP fell 1.8%. The West Coast market is doing great overall, and the mountain state markets are also picking up, especially Denver.
Toll Brothers has exposure to some of the hottest markets while avoiding some of the more downbeat markets such as most of the Midwest and parts of the Deep South. Diversified builders such as PulteGroup (PHM) and D.R. Horton (DHI) have seen slower organic growth than coastal builders such as CalAtlantic Group (CAA).
You can gain diversified exposure to the homebuilding sector through the SPDR S&P Homebuilders ETF (XHB).
City Living segment
In fiscal 2Q16, Toll Brothers’ Urban Infill segment, or City Living, reported a huge rise in ASP to $2.1 million from $1.2 million in fiscal 2Q15. That said, deliveries in units were low at 26.