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1. Company Snapshot

1.a. Company Description

Toll Brothers, Inc., together with its subsidiaries, designs, builds, markets, sells, and arranges finance for a range of detached and attached homes in luxury residential communities in the United States.The company operates in two segments, Traditional Home Building and City Living.It also designs, builds, markets, and sells condominiums through Toll Brothers City Living.


In addition, the company develops, owns, and operates golf courses and country clubs; develops and sells land; and develops, operates, and rents apartments, as well as provides various interior fit-out options, such as flooring, wall tile, plumbing, cabinets, fixtures, appliances, lighting, and home-automation and security technologies.Further, it owns and operates architectural, engineering, mortgage, title, insurance, smart home technology, landscaping, lumber distribution, house component assembly, and manufacturing operations.The company serves move-up, empty-nester, active-adult, and second-home buyers.


It has a strategic partnership with Equity Residential to develop new rental apartment communities in the United States markets.The company was founded in 1967 and is headquartered in Fort Washington, Pennsylvania.

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1.b. Last Insights on TOL

Breaking News: Toll Brothers Inc announced several new luxury home communities and designs. The company unveiled Sagebrook by Toll Brothers in Nolensville Tennessee with 26 single family homes and two new home designs at Jason's Walk in Cumming Georgia. Additionally Crestmoor Estates a new luxury home community is coming soon to San Bruno California. No recent earnings release was found. Analysts at various firms have recommended a buy on the stock citing the company's strong performance and growth prospects with some setting a price target of $50. Recommendations are from Wedbush and Deutsche Bank.

1.c. Company Highlights

2. Toll Brothers' Fiscal 2025 Earnings: A Strong Performance Amidst Market Uncertainty

Toll Brothers reported a robust financial performance in fiscal 2025, with 11,292 homes delivered at an average price of $960,000, resulting in a record $10.8 billion in home sales revenues. The company's adjusted gross margin stood at 27.3%, and earnings per diluted share were $13.49. In Q4, the company met or exceeded guidance across core homebuilding metrics, with $3.4 billion in home sales revenue, an adjusted gross margin of 27.1%, and SG&A margin of 8.3%, earning $4.58 per diluted share, slightly below estimates of $4.88.

Publication Date: Dec -20

📋 Highlights
  • Record Revenue and Profitability:: Fiscal 2025 generated $10.8B in home sales revenue with 27.3% adjusted gross margin and $13.49 EPS, driven by 11,292 homes at $960K average price.
  • Strong Cash Flow and Shareholder Returns:: $1.1B operating cash flow, returning $750M to stockholders via buybacks and dividends in 2025; $650M share repurchase guidance for 2026.
  • Community Growth and Conservative 2026 Outlook:: 9% community count growth in 2025; 2026 guidance targets 10,300–10,700 homes (+$970K avg price) with 26% adjusted gross margin, 8–10% community growth, and 60–40 owned/option lot ratio.
  • Segment Strength and Market Position:: Active adult segment (17% revenue) and move-up/down buyers (70% sales) performing well; luxury focus (54% spec homes) less impacted by affordability pressures.
  • Cost and Inventory Management:: 7–8% lot cost inflation in 2025, with 2026 assuming flat costs; $80K/house incentives flat, $2–3/sq ft construction cost reduction expected, and 2 sales/month/community target.

Operational Highlights

The company grew its community count by 9% and produced strong operating cash flows of $1.1 billion, returning approximately $750 million to stockholders through share repurchases and dividends. Toll Brothers' luxury business, which serves a more affluent customer less impacted by affordability pressures, is a key differentiator. Spec homes accounted for approximately 54% of deliveries in fiscal 2025.

Guidance and Outlook

For fiscal 2026, the company projects new home deliveries of 10,300-10,700 homes with an average price between $970,000 and $990,000, and an adjusted gross margin of approximately 26.0%. The company expects to grow community count by 8-10% and targets 480-490 communities. Guidance for 2026 is conservative, not assuming market improvement or rate decreases. The company's guidance assumes a flat land cost environment and a lower backlog, with 2 sales per month per community, which is a low number historically.

Valuation and Metrics

With a P/E Ratio of 10.05, P/B Ratio of 1.64, and EV/EBITDA of 8.15, Toll Brothers' valuation appears reasonable. The company's ROE stands at 16.77%, indicating strong profitability. Analysts estimate next year's revenue growth at -2.9%, which is factored into the current valuation. The company's Dividend Yield is 0.7%, and Free Cash Flow Yield is 6.82%, providing a decent return for investors.

Market Trends and Challenges

Toll Brothers is cautious about market trends, citing affordability, mortgage rates, and job growth as key factors influencing consumer confidence. The company sees a potential for improvement with lower rates and increased confidence. The exit from the multifamily business has allowed the company to focus on its core homebuilding business, and the proceeds have been used to grow the business and return capital to shareholders.

3. NewsRoom

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Toll Brothers Announces New Luxury Home Community Coming Soon to Nolensville, Tennessee

Feb -10

Source: globenewswire.com

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Toll Brothers Announces New Home Designs in Jason's Walk Community in Cumming, Georgia

Feb -10

Source: globenewswire.com

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Toll Brothers Announces New Luxury Home Community Coming Soon to San Bruno, California

Feb -09

Source: globenewswire.com

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Is the Options Market Predicting a Spike in Toll Brothers Stock?

Feb -09

Source: zacks.com

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Thrivent Financial for Lutherans Sells 17,401 Shares of Toll Brothers Inc. $TOL

Feb -08

Source: defenseworld.net

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Truist Financial Corp Increases Stock Holdings in Toll Brothers Inc. $TOL

Feb -08

Source: defenseworld.net

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Apple, GE Aerospace Lead Five Stocks Flashing Buy Signals

Feb -07

Source: investors.com

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Principal Financial Group Inc. Sells 7,410 Shares of Toll Brothers Inc. $TOL

Feb -07

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.99%)

6. Segments

Home Building

Expected Growth: 8%

Toll Brothers' 8% growth in Home Building is driven by increasing demand for luxury homes, strategic expansion into new markets, and a strong backlog of orders. Additionally, the company's focus on affordability, quality, and customer service has led to higher sales volumes and average selling prices. Furthermore, Toll Brothers' diversified product offerings and geographic presence have helped mitigate market risks, contributing to its robust growth.

Land Sales and Other

Expected Growth: 7%

Toll Brothers' 7% growth in Land Sales and Other is driven by increasing demand for land and higher prices, fueled by a strong housing market and limited supply. Additionally, the company's strategic land acquisition and development efforts, as well as its focus on high-margin land sales, contribute to this growth.

Corporate and Other

Expected Growth: 6%

Toll Brothers' Corporate and Other segment growth of 6% is driven by increased land sales, strategic investments, and cost savings initiatives. Additionally, the company's focus on luxury living and urban development, as well as its expansion into new markets, contribute to the segment's growth.

7. Detailed Products

Luxury Homes

Toll Brothers builds luxury homes in various communities across the United States, offering a range of floor plans, architectural styles, and customization options.

Active Adult Communities

Toll Brothers offers active adult communities designed for residents 55+, featuring low-maintenance living, resort-style amenities, and social activities.

City Living

Toll Brothers develops luxury condominiums and townhomes in urban centers, offering modern amenities and convenient access to city attractions.

Resort Communities

Toll Brothers creates resort-style communities with amenities like golf courses, clubhouses, and recreational facilities, often located near popular vacation destinations.

Master-Planned Communities

Toll Brothers develops large-scale, master-planned communities featuring a range of home styles, amenities, and community facilities.

8. Toll Brothers, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Toll Brothers, Inc. faces moderate threat from substitutes, as customers have limited alternatives for luxury homes. However, the company's focus on quality and customer service helps to mitigate this threat.

Bargaining Power Of Customers

Toll Brothers, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's luxury homes are often customized, making it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

Toll Brothers, Inc. relies on various suppliers for materials and labor. While the company has some bargaining power due to its size, suppliers can still exert some pressure, particularly in times of high demand.

Threat Of New Entrants

Entering the luxury homebuilding market requires significant capital and expertise, which creates a barrier to entry for new competitors. Toll Brothers, Inc. has established a strong brand and has a large market share, making it difficult for new entrants to gain traction.

Intensity Of Rivalry

The luxury homebuilding market is highly competitive, with several established players competing for market share. Toll Brothers, Inc. faces intense rivalry from companies like KB Home, Lennar Corporation, and Taylor Morrison, which can lead to pricing pressure and increased marketing expenses.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 30.51%
Debt Cost 3.95%
Equity Weight 69.49%
Equity Cost 12.20%
WACC 9.68%
Leverage 43.91%

11. Quality Control: Toll Brothers, Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
M/I Homes

A-Score: 5.4/10

Value: 8.0

Growth: 8.2

Quality: 7.0

Yield: 0.0

Momentum: 3.5

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
Toll Brothers

A-Score: 5.4/10

Value: 6.9

Growth: 7.3

Quality: 6.6

Yield: 2.0

Momentum: 3.5

Volatility: 6.3

1-Year Total Return ->

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Stock-Card
Meritage Homes

A-Score: 5.4/10

Value: 8.6

Growth: 5.3

Quality: 6.5

Yield: 4.0

Momentum: 2.5

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Taylor Morrison

A-Score: 5.1/10

Value: 8.0

Growth: 5.7

Quality: 6.4

Yield: 0.0

Momentum: 3.5

Volatility: 7.0

1-Year Total Return ->

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Stock-Card
Century Communities

A-Score: 5.1/10

Value: 8.0

Growth: 7.6

Quality: 4.7

Yield: 3.0

Momentum: 2.0

Volatility: 5.3

1-Year Total Return ->

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Stock-Card
KB Home

A-Score: 4.9/10

Value: 7.8

Growth: 4.6

Quality: 5.3

Yield: 3.0

Momentum: 2.5

Volatility: 6.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

161.27$

Current Price

161.27$

Potential

-0.00%

Expected Cash-Flows