When you look at NYSE:TOL, it's hard to ignore the strong fundamentals, especially considering its likely undervaluation.

Last update: Oct 6, 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.

Evaluating Valuation: NYSE:TOL

ChartMill provides a Valuation Rating to every stock, ranging from 0 to 10. This rating assesses various valuation aspects, comparing price to earnings and cash flows, while considering factors like profitability and growth. NYSE:TOL boasts a 9 out of 10:

Based on the Price/Earnings ratio of 5.45, the valuation of TOL can be described as very cheap.
Based on the Price/Earnings ratio, TOL is valued cheaply inside the industry as 84.85% of the companies are valued more expensively.
TOL's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 25.26.
Based on the Price/Forward Earnings ratio of 6.01, 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 18.51, 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.

Understanding NYSE:TOL's Profitability

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NYSE:TOL scores a 8 out of 10:

The Return On Assets of TOL (12.69%) is better than 81.82% of its industry peers.
Looking at the Return On Equity, with a value of 23.41%, TOL belongs to the top of the industry, outperforming 84.85% of the companies in the same industry.
TOL has a better Return On Invested Capital (14.64%) than 81.82% of its industry peers.
The last Return On Invested Capital (14.64%) for TOL is above the 3 year average (8.48%), which is a sign of increasing profitability.
TOL has a Profit Margin of 14.66%. This is amongst the best in the industry. TOL outperforms 89.39% of its industry peers.
In the last couple of years the Profit Margin of TOL has grown nicely.
With an excellent Operating Margin value of 17.37%, TOL belongs to the best of the industry, outperforming 86.36% of the companies in the same industry.
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.

Deciphering NYSE:TOL's Health Rating

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of NYSE:TOL, the assigned 8 reflects its health status:

TOL has an Altman-Z score of 3.73. This indicates that TOL is financially healthy and has little risk of bankruptcy at the moment.
TOL's Altman-Z score of 3.73 is fine compared to the rest of the industry. TOL outperforms 68.18% of its industry peers.
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's Debt to FCF ratio of 1.54 is fine compared to the rest of the industry. TOL outperforms 69.70% of its industry peers.
TOL has a Debt/Equity ratio of 0.42. This is a healthy value indicating a solid balance between debt and equity.
A Current Ratio of 3.85 indicates that TOL has no problem at all paying its short term obligations.
TOL has a Current ratio of 3.85. This is in the better half of the industry: TOL outperforms 66.67% of its industry peers.
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.

Growth Analysis for NYSE:TOL

A key component of ChartMill's stock assessment is the Growth Rating, which spans from 0 to 10. This rating evaluates diverse growth factors, such as EPS and revenue growth, considering both past performance and future projections. NYSE:TOL has received 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.
TOL shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 27.41% yearly.
TOL shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 11.27%.
TOL shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 12.06% yearly.

Every day, new Decent Value stocks can be found on ChartMill in our Decent Value screener.

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

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.