Earnings Outlook for Toll Brothers

Toll Brothers TOL will be releasing its next round of earnings this Tuesday, May 25. For all of the relevant information, here is your guide for Tuesday's Q2 earnings announcement.

What Are Earnings, Net Income, And Earnings Per Share?

Earnings and EPS are useful metrics of profitability. Total earnings also known as net income is equal to total revenue minus total expenses. Dividing net income by the total number of shares outstanding yields EPS.

Earnings And Revenue

Analysts predict Toll Brothers will report earnings of $0.8 per share on revenue of $1.77 billion. In the same quarter last year, Toll Brothers reported earnings per share of $0.59 on sales of $1.55 billion.

Why Analyst Estimates And Earnings Surprises Are Important

Wall Street analysts who study this company will publish analyst estimates of revenue and EPS. The averages of all analyst EPS and revenue estimates are called the "consensus estimates"; these consensus estimates can have a significant effect on a company's performance during an earnings release. When a company posts earnings or revenue above or below a consensus estimate, it has posted an "earnings surprise", which can really move a stock depending on the difference between actual and estimated values.

If the company were to post earnings in line with the consensus estimate when it reports Tuesday, EPS would be up 35.59%. Revenue would be up 14.27% from the year-ago period. Toll Brothers's reported EPS has stacked up against analyst estimates in the past like this:

Stock Performance

Shares of Toll Brothers were trading at $59.9 as of May 21. Over the last 52-week period, shares are up 99.47%. Given that these returns are generally positive, long-term shareholders are probably content going into this earnings release.

Do not be surprised to see the stock move on comments made during its conference call. Toll Brothers is scheduled to hold the call at 08:30:00 ET and can be accessed here.