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At this stage of the housing cycle, the stock market will probably be unwilling to bid up the valuation multiples of the homebuilders, unless it anticipates either an acceleration in new home sales (and deliveries) or an extension of the growth phase of the housing cycle. Similarly, the market is probably unlikely to bid valuation multiples down (except in a correction), unless it sees that the downside of the housing cycle is imminent.Consequently, if valuation multiples remain flat, total returns on homebuilding stocks will be equal to the growth in their earnings plus dividends. If those 30% average consensus earnings growth expectations for 2018 are realized, then homebuilding stocks will achieve commensurate returns, which would almost certainly beat the overall market.With my now higher 2018 earnings projection of $4.36 per share, which is based upon management's guidance, I expect that Toll's EPS will grow 37.5% this fiscal year.
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