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

Last update: Feb 29, 2024

Our stock screener has spotted TOLL BROTHERS INC (NYSE:TOL) as an undervalued stock with solid fundamentals. NYSE:TOL shows decent health and profitability. At the same time it remains remains attractively priced. We'll dive into each aspect below.

Assessing Valuation for 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 6 for valuation:

A Price/Earnings ratio of 9.05 indicates a reasonable valuation of TOL.
Compared to the rest of the industry, the Price/Earnings ratio of TOL indicates a rather cheap valuation: TOL is cheaper than 83.58% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 26.04. TOL is valued rather cheaply when compared to this.
With a Price/Forward Earnings ratio of 9.08, the valuation of TOL can be described as very reasonable.
Compared to the rest of the industry, the Price/Forward Earnings ratio of TOL indicates a rather cheap valuation: TOL is cheaper than 86.57% of the companies listed in the same industry.
TOL is valuated cheaply when we compare the Price/Forward Earnings ratio to 21.61, which is the current average of the S&P500 Index.
Based on the Enterprise Value to EBITDA ratio, TOL is valued a bit cheaper than 77.61% of the companies in the same industry.
The excellent profitability rating of TOL may justify a higher PE ratio.

Evaluating Profitability: 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 Return On Assets of 10.95%. This is in the better half of the industry: TOL outperforms 79.10% of its industry peers.
TOL has a better Return On Equity (20.19%) than 79.10% of its industry peers.
With an excellent Return On Invested Capital value of 13.30%, TOL belongs to the best of the industry, outperforming 85.07% of the companies in the same industry.
The 3 year average ROIC (11.30%) for TOL is below the current ROIC(13.30%), indicating increased profibility in the last year.
Looking at the Profit Margin, with a value of 13.73%, TOL belongs to the top 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 (17.26%) is better than 91.04% of its industry peers.
TOL's Operating Margin has improved in the last couple of years.
TOL's Gross Margin has improved in the last couple of years.

Assessing Health Metrics for NYSE:TOL

ChartMill assigns a Health Rating to every stock. This score ranges from 0 to 10 and evaluates the different health aspects like liquidity and solvency, both absolutely, but also relative to the industry peers. NYSE:TOL scores a 6 out of 10:

TOL has an Altman-Z score of 3.99. This indicates that TOL is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of TOL (3.99) is better than 68.66% of its industry peers.
The Debt to FCF ratio of TOL is 2.40, which is a good value as it means it would take TOL, 2.40 years of fcf income to pay off all of its debts.
A Debt/Equity ratio of 0.42 indicates that TOL is not too dependend on debt financing.
TOL has a Current Ratio of 3.84. This indicates that TOL is financially healthy and has no problem in meeting its short term obligations.
The Current ratio of TOL (3.84) is better than 68.66% of its industry peers.

Growth Assessment of 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 4 out of 10:

TOL shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 22.19%, 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 21.45% 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

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.