When you look at NYSE:TOL, it's hard to ignore the strong fundamentals, especially considering its likely undervaluation.

Last update: Jul 23, 2024

Our stock screening tool has pinpointed TOLL BROTHERS INC (NYSE:TOL) as an undervalued stock. NYSE:TOL maintains a solid financial footing. Furthermore, it remains attractively priced. Let's delve into the specifics below.

How We Gauge 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 7 for valuation:

The Price/Earnings ratio is 9.96, which indicates a very decent valuation of TOL.
Compared to the rest of the industry, the Price/Earnings ratio of TOL indicates a somewhat cheap valuation: TOL is cheaper than 75.38% of the companies listed in the same industry.
TOL's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 29.08.
A Price/Forward Earnings ratio of 9.39 indicates a reasonable valuation of TOL.
73.85% 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 (20.74), we can say TOL is valued rather cheaply.
76.92% 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 75.38% 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.

How do we evaluate the Profitability for NYSE:TOL?

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NYSE:TOL, the assigned 9 is noteworthy for profitability:

With an excellent Return On Assets value of 11.94%, TOL belongs to the best of the industry, outperforming 86.15% of the companies in the same industry.
Looking at the Return On Equity, with a value of 21.64%, TOL belongs to the top of the industry, outperforming 84.62% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 14.73%, TOL belongs to the top of the industry, outperforming 87.69% of the companies in the same industry.
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.
TOL has a Profit Margin of 15.07%. This is amongst the best in the industry. TOL outperforms 89.23% of its industry peers.
TOL's Profit Margin has improved in the last couple of years.
TOL's Operating Margin of 19.12% is amongst the best of the industry. TOL outperforms 92.31% 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.

Health Analysis for NYSE:TOL

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For NYSE:TOL, the assigned 6 for health provides valuable insights:

An Altman-Z score of 4.21 indicates that TOL is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 4.21, TOL is in the better half of the industry, outperforming 64.62% of the companies in the same industry.
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.
Looking at the Debt to FCF ratio, with a value of 2.35, TOL is in the better half of the industry, outperforming 70.77% of the companies in the same industry.
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.

How We Gauge Growth for NYSE:TOL

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 nice 16.12% 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.
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.
The Revenue is expected to grow by 8.32% on average over the next 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

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.