Key Takeaways

Toll Brothers ( TOL ) shares slumped Wednesday after the homebuilder posted weaker-than-expected results and warned about demand in some markets.

The company reported fiscal first-quarter earnings per share (EPS) of $1.75, with revenue down 1.6% year-over-year to $1.86 billion. Both figures were short of estimates compiled by Visible Alpha. The results came as home sales slipped 4.7% to $1.84 billion, and deliveries climbed 3.3% to 1,991 units. Those missed expectations, as well.

CEO Douglas Yearley, Jr. said the soft profit numbers were mainly because of “impairments and a delay in the sale of a stabilized apartment property in one of our joint ventures.”

However, he added that while demand for higher-priced homes has been solid, “affordability constraints and growing inventories in certain markets are pressuring sales—especially at the lower end.”

Toll Brothers said it anticipates current-quarter deliveries of 2,500 to 2,700 units, while analysts surveyed by Visible Alpha were looking for 2,766.

Shares of Toll Brothers fell more than 5% Wednesday following the news. The stock has gained close to 8% over the past year.

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