Toll Brothers results beat Street, margins strong

"Overall, we believe these results represent a modest net positive due to the company's modestly better-than-expected gross and operating margins," JPMorgan analyst Michael Rehaut said in a research note.

Toll posted gross margins of 23.7 percent, excluding charges.

Martin Connor, chief financial officer, said in a statement, "We believe that earnings growth can come from increasing our community count, but that significant margin improvement will only be achieved once we see the return of some urgency to the market, which should lead to increased sales prices and paces."

For the fiscal fourth quarter ended October 31, Toll earned $15 million, or 9 cents per share. Analysts had expected 5 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 6 percent to $427.8 million, topping analysts' average forecast of $422.9 million. Toll closed on the sale of 757 homes in the quarter, up 8 percent from a year ago.

Contracts for new homes rose 15 percent to 644, with a value of $390.0 million, up 24 percent. The average price of new homes under contract rose to $606,000 from $565,000 a year earlier.

On a per-community basis, net signed contracts were 3.04 per community, an improvement of 3 percent from a year earlier but well below the company's historical fourth-quarter average of 5.87.

Toll ended the quarter with a backlog of 1,667 homes under order, up 12 percent. The backlog was valued at $981.1 million, up 15 percent.

Based on its backlog, Toll expects to sell 2,400 to 3,200 homes in fiscal 2012, about flat with fiscal 2011. It sees an average sale price of $550,000 to $575,000 per home in 2012.

The company reported earnings of $50.5 million in the year-earlier fourth quarter, which included a net tax benefit of $59.9 million. The latest quarter included tax expense of $200,000.

(Reporting by Ilaina Jonas; editing by John Wallace)