NYSE:TOL: good value for what you're paying.

Last update: Jul 1, 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.

A Closer Look at Valuation for NYSE:TOL

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 8 out of 10:

A Price/Earnings ratio of 8.55 indicates a reasonable valuation of TOL.
Based on the Price/Earnings ratio, TOL is valued a bit cheaper than the industry average as 78.46% of the companies are valued more expensively.
TOL's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 28.36.
With a Price/Forward Earnings ratio of 8.07, the valuation of TOL can be described as very reasonable.
TOL's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. TOL is cheaper than 78.46% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 20.16, TOL is valued rather cheaply.
Based on the Enterprise Value to EBITDA ratio, TOL is valued cheaper than 83.08% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, TOL is valued a bit cheaper than 72.31% of the companies in the same industry.
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.

Understanding NYSE:TOL's Profitability

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NYSE:TOL scores a 9 out of 10:

TOL has a Return On Assets of 11.94%. This is amongst the best in the industry. TOL outperforms 86.15% of its industry peers.
TOL has a better Return On Equity (21.64%) than 84.62% of its industry peers.
The Return On Invested Capital of TOL (14.73%) is better than 89.23% of its industry peers.
The last Return On Invested Capital (14.73%) for TOL is above the 3 year average (11.30%), which is a sign of increasing profitability.
Looking at the Profit Margin, with a value of 15.07%, TOL belongs to the top of the industry, outperforming 89.23% of the companies in the same industry.
In the last couple of years the Profit Margin of TOL has grown nicely.
Looking at the Operating Margin, with a value of 19.12%, TOL belongs to the top of the industry, outperforming 92.31% 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.

How We Gauge Health for NYSE:TOL

ChartMill utilizes a Health Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of liquidity and solvency ratios, both in absolute terms and in comparison to industry peers. NYSE:TOL has earned a 6 out of 10:

TOL has an Altman-Z score of 4.02. This indicates that TOL is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of TOL (4.02) is better than 66.15% of its industry peers.
The Debt to FCF ratio of TOL is 2.35, which is a good value as it means it would take TOL, 2.35 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of TOL (2.35) is better than 69.23% of its industry peers.
TOL has a Debt/Equity ratio of 0.39. This is a healthy value indicating a solid balance between debt and equity.
TOL has a Current Ratio of 3.75. This indicates that TOL is financially healthy and has no problem in meeting its short term obligations.
TOL has a Current ratio of 3.75. This is in the better half of the industry: TOL outperforms 61.54% of its industry peers.

Evaluating Growth: 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 16.12%, which is quite good.
TOL shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 21.45% yearly.
Based on estimates for the next years, TOL will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.21% on average per year.
TOL is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 8.32% yearly.

Our Decent Value screener lists more Decent Value stocks and is updated daily.

Our latest full fundamental report of TOL contains the most current fundamental analsysis.

Disclaimer

This article should in no way be interpreted as advice. 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.