U.S. luxury homebuilder Toll Brothers reported mixed quarterly results on Tuesday as profits beat analysts’ estimates but revenue disappointed amid a dip in average selling price per home.
For its third quarter, the company had net income of $148.6 million, or 87 cents a share, up from $105.5 million, or 61 cents a share, in the year-earlier period. Revenue rose to $1.50 billion from $1.27 billion.
The FactSet consensus of analysts’ estimates was for EPS of 69 cents and revenue of $1.51 billion.
Toll Brothers, which builds homes that can cost more than $2 million, introduced a new range of homes earlier this year called T-Select with lower prices and quicker delivery times to tap rising demand from millennials who are starting families.
But according to CNBC, the new line weighed on average selling prices, which fell 6.1% to $791,400 in the third quarter, even as home deliveries rose 26% to 1,899 units.
The company’s results have been boosted in recent quarters by strong housing demand and lack of competition in the luxury new home market. It now expects to deliver between 7,000 and 7,300 homes in fiscal 2017, up from earlier guidance of 6,950 to 7,450 units, at an average delivered price of $800,000 to $825,000 a home.
“The unemployment rate is at a 15-year low, the economy is growing, the stock market is strong, and home prices continue to rise, putting equity in the pockets of those who may want to sell their existing home and move to a new one,” Toll Brothers CEO Douglas C. Yearley said in a news release, noting that new home prices are “significantly outpacing” existing home prices.
CFO Martin P. Connor said the full-year delivery projection was negatively impacted by 150 homes that will now be delivered in fiscal 2018 due to a floor joist recall by a major lumber manufacturer.
In trading Tuesday, Toll Brothers shares fell 2.9% to $37.16, but they have gained 20% in 2017, compared to an 8.4% increase in the S&P 500.