Press Release: Toll Brothers Announces Final Opportunity At Verona Estates Community In Chatsworth, California

Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.

We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.

The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.

The Zacks Earnings ESP, Explained

The Zacks Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information.

Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.

In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.

Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), or the top 15% and top 5% of stocks, respectively, should outperform the market; Strong Buy stocks should outperform more than any other rank.

Should You Consider Toll Brothers?

The final step today is to look at a stock that meets our ESP qualifications. Toll Brothers (TOL) earns a #3 (Hold) 19 days from its next quarterly earnings release on December 9, 2024, and its Most Accurate Estimate comes in at $4.41 a share.

Toll Brothers' Earnings ESP sits at +2.35%, which, as explained above, is calculated by taking the percentage difference between the $4.41 Most Accurate Estimate and the Zacks Consensus Estimate of $4.31. TOL is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

TOL is part of a big group of Construction stocks that boast a positive ESP, and investors may want to take a look at Aspen Aerogels (ASPN) as well.

Slated to report earnings on February 10, 2025, Aspen Aerogels holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.08 a share 82 days from its next quarterly update.

Aspen Aerogels' Earnings ESP figure currently stands at +8.02% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.08.

TOL and ASPN's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.

Find Stocks to Buy or Sell Before They're Reported

Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>

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Toll Brothers (TOL) ended the recent trading session at $151.74, demonstrating a -0.44% swing from the preceding day's closing price. The stock's performance was behind the S&P 500's daily gain of 0.4%. Meanwhile, the Dow experienced a drop of 0.28%, and the technology-dominated Nasdaq saw an increase of 1.04%.

Prior to today's trading, shares of the home builder had lost 0.67% over the past month. This has was narrower than the Construction sector's loss of 1.56% and lagged the S&P 500's gain of 0.62% in that time.

Analysts and investors alike will be keeping a close eye on the performance of Toll Brothers in its upcoming earnings disclosure. The company's earnings report is set to go public on December 9, 2024. The company is predicted to post an EPS of $4.31, indicating a 4.87% growth compared to the equivalent quarter last year. Simultaneously, our latest consensus estimate expects the revenue to be $3.16 billion, showing a 4.59% escalation compared to the year-ago quarter.

Furthermore, it would be beneficial for investors to monitor any recent shifts in analyst projections for Toll Brothers. Such recent modifications usually signify the changing landscape of near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the company's business and profitability.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.22% lower. Currently, Toll Brothers is carrying a Zacks Rank of #3 (Hold).

Looking at valuation, Toll Brothers is presently trading at a Forward P/E ratio of 10.47. This indicates a premium in contrast to its industry's Forward P/E of 9.37.

We can additionally observe that TOL currently boasts a PEG ratio of 1.14. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. By the end of yesterday's trading, the Building Products - Home Builders industry had an average PEG ratio of 0.67.

The Building Products - Home Builders industry is part of the Construction sector. With its current Zacks Industry Rank of 80, this industry ranks in the top 32% of all industries, numbering over 250.

The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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