Toll Brothers, Inc. (TOL) stock analysis

P/E above its 5-year median

Toll Brothers's P/E of 12.1 is above its own 5-year median of 8.3.

P/E below the industry

Toll Brothers's P/E of 12.1 is below the Operative Builders median of 14.1.

EV/EBITDA above its 5-year median

Toll Brothers's EV/EBITDA of 8.2 is above its 5-year median of 5.3.

P/B above the industry

Toll Brothers's price-to-book of 1.63 is above the Operative Builders median of 1.00.

Trading above fair value

The share price of $151.00 is above our fair value estimate of $129.52.

Margin of safety under 20%

The price is 16.6% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 2.2% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew 7.4% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -12.9% over the last twelve months, against a 5-year average of 24.7% a year.

Growing faster than the industry

Revenue grew -1.1% over the last twelve months; the Operative Builders median is -7.3%.

Guidance raised

Toll Brothers raised its fiscal 2026 projected share repurchases outlook on Aug 18, 2026.

Gross margin slipping

Gross margin was 23.7% over the last twelve months, against 25.6% a year earlier.

Return on equity under 15%

Return on equity was 14.4% over the last twelve months and averaged 19.8% over five years; we look for 15% on both.

Return on capital over 10%

Return on invested capital was 16.0%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Toll Brothers's return on equity of 14.4% is above the Operative Builders median of 10.7%.

Earnings grew over 5 years

Net income grew 24.7% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 11.1% over the last twelve months, against a 5-year average of 12.5%.

Net margin above the industry

Toll Brothers's net margin of 11.1% is above the Operative Builders median of 4.3%.

No debt

Toll Brothers has no borrowings on its latest balance sheet.

Debt not rising

With no debt today, leverage cannot have risen.

Debt covered by cash flow

There is no debt to cover.

Interest well covered

No meaningful interest expense to cover.

Short-term liquidity

The balance sheet is not split into current and non-current items.

Low bankruptcy risk

The Altman Z-score is 3.31; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Toll Brothers paid dividends worth 0.7% of the share price over the last twelve months.

Yield below Treasuries

The 0.7% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Toll Brothers yields 0.7%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 9 fiscal years.

Covered by earnings

Dividends take 8.1% of net income.

Covered by free cash flow

Dividends take 8.9% of free cash flow.