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

Last update: Oct 9, 2023

Our stock screening tool has pinpointed TOLL BROTHERS INC (NYSE:TOL) as an undervalued stock option. NYSE:TOL retains a strong financial foundation and an attractive price tag. Let's delve into the specifics below.

Valuation Assessment of NYSE:TOL

ChartMill employs its own Valuation Rating system for all stocks. This score, ranging from 0 to 10, is determined by evaluating different valuation factors, including price to earnings and free cash flow, both in absolute terms and relative to the market and industry. NYSE:TOL has earned a 9 for valuation:

The Price/Earnings ratio is 5.47, which indicates a rather cheap valuation of TOL.
Based on the Price/Earnings ratio, TOL is valued cheaply inside the industry as 85.07% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of TOL to the average of the S&P500 Index (25.46), we can say TOL is valued rather cheaply.
The Price/Forward Earnings ratio is 6.03, which indicates a rather cheap valuation of TOL.
TOL's Price/Forward Earnings ratio is rather cheap when compared to the industry. TOL is cheaper than 83.58% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of TOL to the average of the S&P500 Index (18.67), we can say TOL is valued rather cheaply.
Based on the Enterprise Value to EBITDA ratio, TOL is valued cheaply inside the industry as 80.60% of the companies are valued more expensively.
80.60% of the companies in the same industry are more expensive than TOL, based on the Price/Free Cash Flow ratio.
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The excellent profitability rating of TOL may justify a higher PE ratio.

Looking at the Profitability

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NYSE:TOL, the assigned 8 is noteworthy for profitability:

The Return On Assets of TOL (12.69%) is better than 82.09% of its industry peers.
TOL has a Return On Equity of 23.41%. This is amongst the best in the industry. TOL outperforms 85.07% of its industry peers.
Looking at the Return On Invested Capital, with a value of 14.64%, TOL belongs to the top of the industry, outperforming 82.09% of the companies in the same industry.
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.
The Profit Margin of TOL (14.66%) is better than 89.55% of its industry peers.
In the last couple of years the Profit Margin of TOL has grown nicely.
TOL has a better Operating Margin (17.37%) than 86.57% of its industry peers.
In the last couple of years the Operating Margin of TOL has grown nicely.
TOL's Gross Margin has improved in the last couple of years.

Exploring NYSE:TOL's Health

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NYSE:TOL was assigned a score of 8 for health:

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 has a Altman-Z score of 3.73. This is in the better half of the industry: TOL outperforms 68.66% 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 has a better Debt to FCF ratio (1.54) than 68.66% 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.
TOL has a Current Ratio of 3.85. This indicates that TOL is financially healthy and has no problem in meeting its short term obligations.
TOL has a better Current ratio (3.85) than 67.16% of its industry peers.
The current and quick ratio evaluation for TOL is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Growth Assessment of NYSE:TOL

ChartMill employs its own Growth Rating system for all stocks. This score, ranging from 0 to 10, is derived by evaluating different growth factors, such as EPS and revenue growth, taking into account both past performance and future projections. NYSE:TOL has earned a 5 for growth:

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.
Looking at the last year, TOL shows a quite strong growth in Revenue. The Revenue has grown by 11.27% in the last year.
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.

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.

Disclaimer

This article should in no way be interpreted as advice in any way. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.