NYSE:TOL is probably undervalued for the fundamentals it is displaying.

Last update: Nov 1, 2023

Discover TOLL BROTHERS INC (NYSE:TOL), an undervalued stock highlighted by our stock screener. NYSE:TOL showcases solid financial health and profitability while maintaining an appealing valuation. We'll explore the details.

Valuation Assessment of NYSE:TOL

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of NYSE:TOL, the assigned 9 reflects its valuation:

The Price/Earnings ratio is 5.45, which indicates a rather cheap valuation of TOL.
86.57% 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 22.86, TOL is valued rather cheaply.
The Price/Forward Earnings ratio is 6.01, which indicates a rather cheap valuation of TOL.
Compared to the rest of the industry, the Price/Forward Earnings ratio of TOL indicates a rather cheap valuation: TOL is cheaper than 82.09% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 18.20, TOL is valued rather cheaply.
80.60% of the companies in the same industry are more expensive than TOL, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, TOL is valued a bit cheaper than the industry average as 79.10% of the companies are valued more expensively.
The 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.

Looking at the Profitability

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For NYSE:TOL, the assigned 8 is a significant indicator of profitability:

TOL has a better Return On Assets (12.69%) than 83.58% of its industry peers.
TOL's Return On Equity of 23.41% is amongst the best of the industry. TOL outperforms 85.07% of its industry peers.
With an excellent Return On Invested Capital value of 14.64%, TOL belongs to the best 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.
With an excellent Profit Margin value of 14.66%, TOL belongs to the best of the industry, outperforming 89.55% of the companies in the same industry.
TOL's Profit Margin has improved in the last couple of years.
The Operating Margin of TOL (17.37%) is better than 89.55% of its industry peers.
In the last couple of years the Operating Margin of TOL has grown nicely.
In the last couple of years the Gross Margin of TOL has grown nicely.

A Closer Look at Health for NYSE:TOL

A critical element of ChartMill's stock evaluation is the Health Rating, which spans from 0 to 10. This rating considers multiple health factors, including liquidity and solvency, both in absolute terms and relative to industry peers. NYSE:TOL has received a 8 out of 10:

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.
With a decent Altman-Z score value of 3.73, TOL is doing good in the industry, outperforming 71.64% 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's Debt to FCF ratio of 1.54 is fine compared to the rest of the industry. TOL outperforms 67.16% 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.
TOL has a Current ratio of 3.85. This is in the better half of the industry: TOL outperforms 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.

Exploring NYSE:TOL's Growth

Every stock receives a Growth Rating from ChartMill, ranging from 0 to 10. This rating assesses various growth aspects, including historical and projected EPS and revenue growth. NYSE:TOL boasts a 5 out of 10:

The Earnings Per Share has grown by an impressive 53.43% over the past year.
The Earnings Per Share has been growing by 27.41% on average over the past years. This is a very strong growth
The Revenue has grown by 11.27% in the past year. This is quite good.
The Revenue has been growing by 12.06% on average over the past years. This is quite good.

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

For an up to date full fundamental analysis you can check the fundamental report of TOL

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.