TOLL BROTHERS INC (NYSE:TOL) is an undervalued gem with solid fundamentals.

Consider TOLL BROTHERS INC (NYSE:TOL) as a top value stock, identified by our stock screening tool. TOL shines in terms of profitability, solvency, and liquidity, all while remaining very reasonably priced. Let's dive deeper into the analysis.

Understanding TOL's Valuation Score

An integral part of ChartMill's stock analysis is the Valuation Rating, which spans from 0 to 10. This rating evaluates diverse valuation factors, including price to earnings and cash flows, while considering the stock's profitability and growth. TOL has received a 7 out of 10:

• Based on the Price/Earnings ratio of 7.56, the valuation of TOL can be described as very cheap.
• TOL's Price/Earnings ratio is a bit cheaper when compared to the industry. TOL is cheaper than 64.06% of the companies in the same industry.
• The average S&P500 Price/Earnings ratio is at 28.92. TOL is valued rather cheaply when compared to this.
• The Price/Forward Earnings ratio is 6.66, which indicates a rather cheap valuation of TOL.
• Compared to the rest of the industry, the Price/Forward Earnings ratio of TOL indicates a rather cheap valuation: TOL is cheaper than 82.81% of the companies listed in the same industry.
• When comparing the Price/Forward Earnings ratio of TOL to the average of the S&P500 Index (21.65), we can say TOL is valued rather cheaply.
• 67.19% of the companies in the same industry are more expensive than TOL, based on the Enterprise Value to EBITDA ratio.
• TOL's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. TOL is cheaper than 73.44% of the companies in the same industry.
• The excellent profitability rating of TOL may justify a higher PE ratio.

Exploring TOL's Profitability

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 TOL, the assigned 8 is noteworthy for profitability:

• TOL's Return On Assets of 11.08% is amongst the best of the industry. TOL outperforms 81.25% of its industry peers.
• TOL has a better Return On Equity (19.36%) than 79.69% of its industry peers.
• Looking at the Return On Invested Capital, with a value of 13.82%, TOL is in the better half of the industry, outperforming 78.13% of the companies in the same industry.
• The last Return On Invested Capital (13.82%) for TOL is above the 3 year average (13.26%), which is a sign of increasing profitability.
• With an excellent Profit Margin value of 14.03%, TOL belongs to the best of the industry, outperforming 90.63% of the companies in the same industry.
• TOL's Profit Margin has improved in the last couple of years.
• Looking at the Operating Margin, with a value of 18.19%, TOL belongs to the top of the industry, outperforming 90.63% 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.

Evaluating Health: 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. TOL has earned a 6 out of 10:

• An Altman-Z score of 3.90 indicates that TOL is not in any danger for bankruptcy at the moment.
• With a decent Altman-Z score value of 3.90, TOL is doing good in the industry, outperforming 67.19% of the companies in the same industry.
• TOL has a debt to FCF ratio of 3.35. This is a good value and a sign of high solvency as TOL would need 3.35 years to pay back of all of its debts.
• With a decent Debt to FCF ratio value of 3.35, TOL is doing good in the industry, outperforming 64.06% of the companies in the same industry.
• TOL has a Debt/Equity ratio of 0.35. This is a healthy value indicating a solid balance between debt and equity.
• TOL has a Current Ratio of 3.83. This indicates that TOL is financially healthy and has no problem in meeting its short term obligations.
• The Current ratio of TOL (3.83) is better than 71.88% of its industry peers.

A Closer Look at Growth for TOL

ChartMill assigns a Growth Rating to each stock, ranging from 0 to 10. This rating is determined by analyzing different growth elements, including EPS and revenue growth, spanning both historical and future figures. In the case of TOL, the assigned 5 reflects its growth potential:

• The Earnings Per Share has been growing by 27.96% on average over the past years. This is a very strong growth
• Measured over the past years, TOL shows a quite strong growth in Revenue. The Revenue has been growing by 8.47% on average per year.
• The Earnings Per Share is expected to grow by 9.84% on average over the next years. This is quite good.

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

Disclaimer

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.