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What to Expect From Toll Brothers Earnings

Amid recent investor skepticism of the high-end home builder, Pennsylvania-based Toll Brothers is expected to show earnings per share of 10 cents and revenues at $502 million, according to Thomson Reuters, when it reports its first quarter earnings before the bell Wednesday morning.

For fiscal year 2013, analysts are estimating earnings of 88 cents per share, but those estimates have been shrinking due to concerns over the broader economy.

"I think it will be a pretty good report for Toll. The high-end and move-up markets is where it's at right now," said David Goldberg, a home builder analyst at UBS. "Pricing is improving."

(Read More: Home Builders Get Jitters for First Time in a Year.)

Toll reported very strong earnings last quarter, with big jumps in both sales and income and a drop in cancellation rates. There had been concern that the looming "fiscal cliff" would hit Toll's higher-end customers, but that did not come to pass.

While other home builders have seen big jumps in their stock prices over the past year, Toll is up just under 3 percent from a year ago. However, it is up nearly 25 percent from last November, when it had taken it a big dip.

(Read More: Mortgage Mess Still Mires US Housing Recovery.)

Scott Eelis | Bloomberg | Getty Images

This month Toll announced that its subsidiary, Gibraltar Capital and Asset Management, closed four deals with three companies to purchase loan portfolios backed by retail shopping centers, residential land and golf courses. Together the deals are worth over $33 million.

"These transactions reflect Gibraltar's continuing ability to generate alternative revenues for Toll Brothers and source new opportunities to acquire acquisition, development and construction (ADC) and commercial real estate assets," said Douglas C. Yearley, chief executive officer of Toll Brothers in a statement.

(Read More: Why Home Builders Won't Drop New Home Prices.)

Toll Brothers also announced recently that it will be expanding its "City Living" brand into the greater Washington, D.C. area. It has already seen considerable success in New York City. Toll Brothers is also acquiring land in Pennsylvania and Maryland in order to build off-campus student housing. Both these bets help to offset the still volatile residential housing market.

"They may have more to say about their moves into multi-family rentals," Goldberg said.

—By CNBC's Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC

—CNBC producer Stephanie Dhue contributed to this report.

Questions? Comments? RealtyCheck@cnbc.com

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  • Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.

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