NYSE:TOL is an undervalued gem with solid fundamentals.

Last update: Mar 22, 2024

TOLL BROTHERS INC (NYSE:TOL) has caught the attention of our stock screener as a great value stock. NYSE:TOL excels in profitability, solvency, and liquidity, all while being very reasonably priced. Let's delve into the details.

Deciphering NYSE:TOL's Valuation Rating

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 7 reflects its valuation:

With a Price/Earnings ratio of 9.78, the valuation of TOL can be described as very reasonable.
Compared to the rest of the industry, the Price/Earnings ratio of TOL indicates a somewhat cheap valuation: TOL is cheaper than 79.10% of the companies listed in the same industry.
When comparing the Price/Earnings ratio of TOL to the average of the S&P500 Index (26.19), we can say TOL is valued rather cheaply.
TOL is valuated reasonably with a Price/Forward Earnings ratio of 9.16.
85.07% of the companies in the same industry are more expensive than TOL, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of TOL to the average of the S&P500 Index (22.59), we can say TOL is valued rather cheaply.
Based on the Enterprise Value to EBITDA ratio, TOL is valued a bit cheaper than the industry average as 67.16% of the companies are valued more expensively.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of TOL indicates a somewhat cheap valuation: TOL is cheaper than 65.67% of the companies listed in the same industry.
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.

Looking at the Profitability

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 9 for profitability:

TOL's Return On Assets of 11.34% is amongst the best of the industry. TOL outperforms 83.58% of its industry peers.
With an excellent Return On Equity value of 20.23%, TOL belongs to the best of the industry, outperforming 82.09% of the companies in the same industry.
The Return On Invested Capital of TOL (13.90%) is better than 88.06% of its industry peers.
The 3 year average ROIC (11.30%) for TOL is below the current ROIC(13.90%), indicating increased profibility in the last year.
With an excellent Profit Margin value of 13.97%, 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.
With an excellent Operating Margin value of 17.80%, TOL belongs to the best of the industry, outperforming 91.04% 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.

Health Assessment of 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:

An Altman-Z score of 4.22 indicates that TOL is not in any danger for bankruptcy at the moment.
TOL has a better Altman-Z score (4.22) than 71.64% of its industry peers.
The Debt to FCF ratio of TOL is 2.18, which is a good value as it means it would take TOL, 2.18 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 2.18, TOL is in the better half of the industry, outperforming 62.69% of the companies in the same industry.
A Debt/Equity ratio of 0.39 indicates that TOL is not too dependend on debt financing.
A Current Ratio of 3.74 indicates that TOL has no problem at all paying its short term obligations.
TOL has a Current ratio of 3.74. This is in the better half of the industry: TOL outperforms 67.16% of its industry peers.

Evaluating Growth: NYSE:TOL

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. NYSE:TOL was assigned a score of 4 for growth:

TOL shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 22.08%, which is quite impressive.
The Earnings Per Share has been growing by 21.45% on average over the past years. This is a very strong growth

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

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

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.