Toll Brothers (NYSE: TOL) is the largest luxury homebuilder in the United States, operating in 6 regions and 21 states. The company designs, constructs, and finances single family homes with an average closing price of $626K. The majority of Toll Brothers’ customers (60-70%) are considered move-up buyers, who are previous homeowners interested in purchasing a larger residence. The remaining sales are split between empty nesters, active adults, and second home buyers. The homebuilder operates primarily in affluent planned suburban communities with easy highway access to major metropolitan areas. The company decreases unit dwelling costs by offering the same home designs in similar communities. Toll Brothers builds in nearly 400 communities that together contain nearly 32,000 homesites.
Toll Brothers' national scope and its focus on the luxury end of the homebuilding spectrum give it some protection from fluctuations in the U.S. economy and U.S. housing market, but it is far from immune to these factors. The company was severely affected by the collapse of subprime lending and the U.S. Housing Market. The company suffered it's second straight year of negative earnings, losing $756 million in 2009.
The company builds many kinds of homes in different price ranges:
By geographic segments:
Toll Brothers faces competition from both regional and local homebuilders. The flexibility of small custom construction companies can often be more consistent with the varied tastes of luxury homebuyers. To compete against these custom builders, Toll Brothers has been forced to develop a diverse product line. The company also faces competition from sales of existing homes.
Toll Brothers’ closest competitors include the following: