Tomahawk, WI 2/24/2014 (Basicsmedia) – Toll Brothers Inc. (NYSE:TOL) will be announcing the first quarter 2014 results tomorrow. The housing market is facing a downturn and though it appears to be temporary, it is bound to play a role in the company’s results.

The Expectation:

Toll Brothers Inc. (NYSE:TOL) is expected to declare revenues of $643.92 million for the quarter against $1.04 billion declared for the fourth quarter. Analysts expected the earnings to be $0.18 per share against $0.54 declared for the fourth quarter. There is a downturn in demand for housing and it has been blamed on the severe cold conditions across the United Sates as well as on the macroeconomic condition. The company’s results could throw a light on these issues. If the downturn is on account of the adverse weather conditions, it will be temporary and could lead to a surge in demand when the weather conditions improve. If, it is on account of the macroeconomic conditions, the company and its investors will have to wait till the conditions improve and consumer confidence is restored.

The Acquisition:

Toll Brothers Inc. (NYSE:TOL) expected the downturn to be temporary in nature. It has recently acquired homebuilding operations of Shapell Industries for $1.60 billion in cash. The company comes with its vast land bank consisting of 5,200 home sites, more than 97% being entitled. Shapell has spent the last few decades accumulating this land bank. The other plus for the deal is the location. The land is located in California’s affluent and high growth markets of San Francisco Bay area, Los Angeles, the Carlsbad market and Orange County. Apart from the land portfolio, approximately 100 associates will also be joining the company. The timing of the deal is also significant as the company will be able to take advantage of the Spring selling season. Toll Brothers Inc. (NYSE:TOL) expects to sell $500 million of the land and plans to recoup its investment within eighteen months.

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