Toll Brothers earnings could mean an outsized move next Wednesday
Although earnings season is winding down, there are still a few reports next week worth monitoring. Toll Brothers Inc (NYSE:TOL) will announce its latest quarterly report after the close on Tuesday, May 20. Analysts expect the homebuilding name to post earnings of $2.86 per share on revenue of $2.5 billion, representing a decline of 15.4% and 11.8%, respectively, from the same quarter last year.
Over the last two years, Toll Brothers stock only closed three post-earnings sessions lower, though that includes the last two. The stock has averaged a 4.8% next-day swing, regardless of direction, which is slightly lower than the 5.8% move the options pits are pricing in for next Wednesday's trading.
At last look today, TOL was down 2.6% at $106.52. The stock has been on the rise since its April 9, 52-week low of $86.67, and earlier this week managed to break above long-term resistance at the 60-day moving average. Year-to-date, the equity is still down 15.5%.
Calls have been much more popular than usual over the last 10 weeks. TOL's 50-day call/put volume ratio of 1.25 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks higher than 98% of readings from the past 12 months.
TOL tends to outperform options traders' volatility expectations over the last 12 months, making this an excellent opportunity to weigh in with options, even with earnings looming. This is per its Schaeffer's Volatility Scorecard (SVS) of 72 out of 100.