Investopedia: Toll Brothers Shows Not All Housing Is Terrible

The housing news cycle is still focused on the negative. The dominant stories from day to day still tend to revolve around the large volumes of bank-owned properties, the ongoing issues with the foreclosure process, and more and more stories of the malfeasance of banks, mortgage brokers, realtors and borrowers.

Wise investors know better than to just read the headlines without looking a little deeper. To that end, looking at the recent earnings report from Toll Brothers (NYSE:TOL) suggests that the higher-end housing market is doing OK and seems on track for recovery. That's not such good news for builders like Hovnanian (NYSE:HOV), Lennar (NYSE:LEN) or D.R. Horton (NYSE:DHI), but a recovery somewhere is better than bad news everywhere.

Underlying Second Quarter Results Seem a Little Better 

To be clear, it was not as though the Toll Brothers earnings report was uniformly fantastic. Revenue came in as expected with growth of 3%, but bottom-line earnings were worse than expected due in part to higher impairment charges. While the company did see solid improvement in gross margin (excluding impairments), SG&A was a little higher.

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http://stocks.investopedia.com/stock-analysis/2011/Toll-Brothers-Shows-Not-All-Housing-Is-Terrible-TOL-LEN-DHI-PHM-HD-LOW-MHK0601.aspx