NYSE:TOL appears to be flying under the radar despite its strong fundamentals.

Last update: Oct 4, 2023

Our stock screening tool has pinpointed TOLL BROTHERS INC (NYSE:TOL) as an undervalued stock. NYSE:TOL maintains a solid financial footing. Furthermore, it remains attractively priced. Let's delve into the specifics below.

Assessing Valuation for NYSE:TOL

ChartMill assigns a Valuation Rating to every stock. This score ranges from 0 to 10 and evaluates the different valuation aspects and compares the price to earnings and cash flows, while taking into account profitability and growth. NYSE:TOL scores a 9 out of 10:

Based on the Price/Earnings ratio of 5.42, the valuation of TOL can be described as very cheap.
86.36% of the companies in the same industry are more expensive than TOL, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 25.11, TOL is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 5.97, the valuation of TOL can be described as very cheap.
Compared to the rest of the industry, the Price/Forward Earnings ratio of TOL indicates a rather cheap valuation: TOL is cheaper than 84.85% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 18.41, TOL is valued rather cheaply.
TOL's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. TOL is cheaper than 80.30% of the companies in the same industry.
80.30% of the companies in the same industry are more expensive than TOL, based on the Price/Free Cash Flow ratio.
TOL's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
TOL has an outstanding profitability rating, which may justify a higher PE ratio.

Profitability Assessment of NYSE:TOL

ChartMill utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. NYSE:TOL has earned a 8 out of 10:

TOL has a better Return On Assets (12.69%) than 81.82% of its industry peers.
TOL has a Return On Equity of 23.41%. This is amongst the best in the industry. TOL outperforms 84.85% of its industry peers.
TOL has a Return On Invested Capital of 14.64%. This is amongst the best in the industry. TOL outperforms 81.82% of its industry peers.
The 3 year average ROIC (8.48%) for TOL is below the current ROIC(14.64%), indicating increased profibility in the last year.
The Profit Margin of TOL (14.66%) is better than 89.39% of its industry peers.
TOL's Profit Margin has improved in the last couple of years.
TOL's Operating Margin of 17.37% is amongst the best of the industry. TOL outperforms 86.36% of its industry peers.
TOL's Operating Margin has improved in the last couple of years.
In the last couple of years the Gross Margin of TOL has grown nicely.

Unpacking NYSE:TOL's Health Rating

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NYSE:TOL has earned a 8 out of 10:

TOL has an Altman-Z score of 3.72. This indicates that TOL is financially healthy and has little risk of bankruptcy at the moment.
With a decent Altman-Z score value of 3.72, TOL is doing good in the industry, outperforming 68.18% of the companies in the same industry.
The Debt to FCF ratio of TOL is 1.54, which is an excellent value as it means it would take TOL, only 1.54 years of fcf income to pay off all of its debts.
TOL has a better Debt to FCF ratio (1.54) than 69.70% of its industry peers.
A Debt/Equity ratio of 0.42 indicates that TOL is not too dependend on debt financing.
A Current Ratio of 3.85 indicates that TOL has no problem at all paying its short term obligations.
Looking at the Current ratio, with a value of 3.85, TOL is in the better half of the industry, outperforming 66.67% of the companies in the same industry.
TOL does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Analyzing Growth Metrics

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. NYSE:TOL scores a 5 out of 10:

TOL shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 53.43%, which is quite impressive.
Measured over the past years, TOL shows a very strong growth in Earnings Per Share. The EPS has been growing by 27.41% on average per year.
The Revenue has grown by 11.27% in the past year. This is quite good.
Measured over the past years, TOL shows a quite strong growth in Revenue. The Revenue has been growing by 12.06% on average per year.

More Decent Value stocks can be found in our Decent Value screener.

Our latest full fundamental report of TOL contains the most current fundamental analsysis.

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.