Toll Brothers Grades for Various Housing Markets
By Dr. Duru written for One-Twenty
February 24, 2006
Toll Brothers came through on Thursday morning and maintained the momentum
and case for a bottom in housing stocks. Just two weeks ago, Toll delivered its bad news and homebuilder stocks took a hard tumble. This time around, the bad news still allowed Toll Brothers stock to rise. (For those of you who are technically inclined, I strongly encourage you to review the charts. I do not post them here, but you will note that most of the homebuilder stocks have now risen right into areas of major resistance: 50 DMAs, 200 DMAs, and even upper Bollinger Bands.)
A lot has already been reported on Toll's earnings call given that we are so obssessed with the housing bubble. However, I would encourage you to read the report for
yourself and, even better, listen
to the conference call. I will say that the executives remain relatively
positive overall. They acknowledge that this year will feature a slowdown in
many of their housing markets but that by next year they expect things to
stabilize and even begin improving once again. So, here we are again with no
real alarm bells coming from the executives of the homebuilders. And if we
are to believe them, all the bad news is now out. If the stocks follow suit,
as I suspect they will, the jig could be up for shorts in this sector for
now.
Anyway, I thought those of you who are just as obssessed with the housing
bubble as I am might be interested in seeing Toll's ratings of its various
housing markets. These grades represent Toll's ratings of their markets over the last four weeks or so of business. I copied this down from listening to the earnings call (and left it in the order in which they read it). An analyst during the call claimed that these ratings are very similar to the ratings from the last earnings call. When you think through the implications of these grades, remember that Toll specializes in the high-end of the housing market. Again, I highly recommend that you listen to the conference call for yourself.
Here is the approximate key:
A: Toll is increasing prices
B: Lower pricing power
C: Sales down, prices flat
D: Dog. Sales down and lack
of any pricing power
F: "Forget about
it"
Region
Rating
Toll Brothers Comments
Phoenix, AZ
A
even with speculative selling
Palm Springs, CA
B
Northern
California
C
Southern
California
A
little info - only 3 communities
Colorado
A
Connecticut
B
have raised prices in past few
weeks - CEO feels too much
Delaware
C+
Maryland/Delaware shore
D
Central Florida/Orlando
C
A+ in last 2 weeks
East Gold Coast, FL
B
Jacksonville, FL
D
this past week as good though
West Gold Coast, FL
C
has cooled down from B a few
weeks ago and A over a month ago
Chicago, IL
B
raised some prices in past few
weeks
Detroit, MI
C
surprised not an F
Minnesota
C/D+
only 2 communities
Las Vegas, NV
B
Reno, NV
C
Massachusetts
C
Rhode Island
C
1 community
New Jersey suburbs
C+
surprising
New Jersey - urban infill (Hoboken)
A+
New York City ex-urb (Peekskill)
C
Charlotte, NC
A-/B+
Raleigh, NC
B
solid
Philadelphia area
B+
Hilton Head (Blufton), South Carolina
B
considers this excellent for
time of year
Austin, TX
D
thought they were coming back 5
weeks ago, wishing had fewer communities
San Antonio, TX
B
2 communities
Dallas, TX
B+
price sensitive, but can still
make good profit on good volume