NYSE:TOL stands out as a stock that provides good value for the fundamentals it showcases.

Last update: Jan 2, 2024

Uncover the hidden value in TOLL BROTHERS INC (NYSE:TOL) as our stock screening tool recommends it as an undervalued choice. NYSE:TOL maintains a robust financial position and offers an attractive pricing perspective. Let's dig deeper into the analysis.

Analyzing Valuation Metrics

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 7 out of 10:

With a Price/Earnings ratio of 7.92, the valuation of TOL can be described as very cheap.
Based on the Price/Earnings ratio, TOL is valued cheaper than 88.06% of the companies in the same industry.
When comparing the Price/Earnings ratio of TOL to the average of the S&P500 Index (26.08), we can say TOL is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 8.77, the valuation of TOL can be described as reasonable.
Based on the Price/Forward Earnings ratio, TOL is valued cheaply inside the industry as 86.57% of the companies are valued more expensively.
TOL is valuated cheaply when we compare the Price/Forward Earnings ratio to 20.99, which is the current average of the S&P500 Index.
TOL's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. TOL is cheaper than 83.58% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of TOL indicates a somewhat cheap valuation: TOL is cheaper than 76.12% of the companies listed in the same industry.
TOL has an outstanding profitability rating, which may justify a higher PE ratio.

A Closer Look at Profitability for NYSE:TOL

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NYSE:TOL was assigned a score of 8 for 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 86.57% of its industry peers.
TOL has a better Return On Invested Capital (14.52%) than 83.58% of its industry peers.
The 3 year average ROIC (11.32%) for TOL is below the current ROIC(14.52%), indicating increased profibility in the last year.
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.
In the last couple of years the Profit Margin of TOL has grown nicely.
The Operating Margin of TOL (17.37%) is better than 91.04% 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.

Assessing Health for NYSE:TOL

Every stock is evaluated by ChartMill, receiving a Health Rating on a scale of 0 to 10. This assessment considers different health aspects, including liquidity and solvency, both in absolute terms and relative to industry peers. NYSE:TOL has achieved a 8 out of 10:

An Altman-Z score of 4.06 indicates that TOL is not in any danger for bankruptcy at the moment.
The Altman-Z score of TOL (4.06) is better than 67.16% of its industry peers.
TOL has a debt to FCF ratio of 1.54. This is a very positive value and a sign of high solvency as it would only need 1.54 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 1.54, TOL is in the better half of the industry, outperforming 61.19% of the companies in the same industry.
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's Current ratio of 3.85 is fine compared to the rest of the industry. TOL outperforms 68.66% 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.

ChartMill's Evaluation of Growth

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NYSE:TOL has achieved a 5 out of 10:

The Earnings Per Share has grown by an impressive 53.43% over the past year.
TOL shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 21.45% yearly.
Looking at the last year, TOL shows a quite strong growth in Revenue. The Revenue has grown by 11.27% in the last year.

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Check the latest full fundamental report of TOL for a complete fundamental analysis.

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.