With the 1st quarter earnings season almost over, it’s slim pickings with less than 100 companies set to announce their financial report cards for the week of June 2nd. We found 4 companies we believe will unveil bottom line numbers better or worse than Wall Street expects. Below we highlight a company we expect will drop on its eps report. Our subscribers can expect to read about the remaining 3 before the market opens Monday.

Toll Brothers (TOL) will report their 2nd quarter on before the market opens on Tuesday, June 3rd. Toll Brothers is the nation’s premier builder of luxury homes.

Thirty days ago, the consensus estimate among Wall Street gurus was a loss of 15 cents for TOL. Today, Toll Brothers is expected to lose 86 cents per share. The Correct Call believes TOL’s losses will be steeper than investors and analysts expect.

Despite an uptick in new home sales for April, prices have fallen dramatically. Many experts believe the housing market will not hit bottom until well into 2009 and maybe as late as early 2010. As a result, we believe analysts’ expectations of a 3rd quarter loss of only 15 cents and a profit of 65 cents for 2009 for TOL are overly optimistic.

Perhaps lower expectations are driving the current activity in home builder stocks. As you can see on Dow Jones Home Construction Index chart, it appears the short rally in housing stocks has ended and lower prices are coming.

Toll Brothers’ chart doesn’t appear to be any healthier.

Suggested Option Trade:

Aggressive investors might want to consider the TOL July 22.5 Put Options. If we have made The Correct Call on Toll Brothers and its shares trade at $19 by mid-June, investors can expect to make nearly 40% on their money based on May 29th’s last trade of $2.45.

Suggested Stop: $23.64

Disclosure: none