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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

Toll Brothers' recent performance was negatively impacted by margin pressure, driven by rising incentives and softer sales volumes. The company's operating and net margins fell by 168 bps and 118 bps, respectively, despite a 7.96% year-over-year revenue surge to $2.95 billion. Management confirmed that spec homes will continue to comprise a substantial proportion of sales, potentially capping margin growth. Additionally, the company faces softer demand, although pricing power and efficiency gains may help sustain its earnings target. Institutional investors, such as Advantage Alpha Capital Partners LP and Creative Planning, have recently increased their stakes in the company. According to MarketBeat.com, sixteen analysts covering the company have an average recommendation of "Moderate Buy".

1.c. Company Highlights

2. Toll Brothers Delivers Record Q3 Home Sale Revenues

Toll Brothers delivered 2,959 homes at an average price of $974,000, generating record third-quarter home sale revenues of $2.9 billion. The adjusted gross margin was 27.5%, exceeding guidance by 25 basis points, and earnings were $370 million or $3.73 per diluted share, beating estimates of $3.59. The company returned approximately $226 million to stockholders through dividends and share repurchases.

Publication Date: Aug -20

📋 Highlights
  • Record Home Sale Revenues:: Generated $2.9 billion in Q3 FY2025 from 2,959 homes at an average price of $974,000.
  • Adjusted Gross Margin:: Exceeded guidance at 27.5%, driving $370 million in earnings ($3.73 per diluted share).
  • Shareholder Returns:: Returned $226 million to stockholders via dividends and share repurchases.
  • Spec Home Mix & Margins:: 50% spec homes in operations, with a 3% margin differential vs. build-to-order homes (30% margin).
  • Backlog & Pricing:: $1.16 million average price in backlog, with 3,200 spec homes in process and 1,800 permits ready to start.

Operational Highlights

In the quarter, Toll Brothers signed 2,388 net contracts for $2.4 billion, with an average sales price of over $1 million, up 4.5% versus the third quarter of fiscal 2024. The company now expects deliveries to be approximately 11,200 homes for the full year, at the lower end of its previous range, and is maintaining all other key guidance metrics, including a full-year adjusted gross margin of 27.25%. According to CFO Marty Connor, "The company's balance sheet, financial position, and liquidity are strong, with a net debt-to-capital ratio of 19.3%, $852 million in cash and equivalents, and $2.2 billion available under its revolving bank credit facility."

Outlook and Guidance

The company expects to deliver approximately 3,350 homes in the fourth quarter and 11,200 homes for the full year, with an average price of deliveries in the fourth quarter between $970,000 and $980,000. Toll Brothers projects earnings of approximately $13.75 per diluted share in fiscal 2025, a full-year return on beginning equity of approximately 18%, and a book value of approximately $88 per share at year-end.

Valuation and Financial Metrics

At current prices, Toll Brothers trades at a P/E Ratio of 9.53, a P/B Ratio of 1.62, and a P/S Ratio of 1.19. The EV/EBITDA multiple is 8.04, and the Dividend Yield is 0.73%. The Free Cash Flow Yield is 5.61%, and ROIC is 14.04%, while ROE is 17.46%. The Net Debt / EBITDA ratio is 1.12. These metrics suggest that the stock may be attractively valued given its strong financial performance and growth prospects.

Industry Trends and Market Positioning

The company notes that the recent decline in interest rates has not yet had an immediate impact on sales, but it expects an increase in buyers as rates continue to decline. Toll Brothers feels encouraged by the current market trend and is optimistic about its positioning, citing pent-up demand and a strong demographic trend. With a strong land position and community count growth expected to be similar to this year, the company is well-positioned for growth in 2026.

3. NewsRoom

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Toll Brothers Announces New Rivercrest Townhome Community Coming Soon to Reno, Nevada

Dec -04

Source: globenewswire.com

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Fisher Asset Management LLC Reduces Stock Position in Toll Brothers Inc. $TOL

Dec -04

Source: defenseworld.net

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Toll Brothers (TOL) Beats Stock Market Upswing: What Investors Need to Know

Dec -03

Source:

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Toll Brothers Announces Model Home Grand Opening at Maple Hills Community in Covington, Washington

Dec -03

Source: globenewswire.com

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Stay Ahead of the Game With Toll Brothers (TOL) Q4 Earnings: Wall Street's Insights on Key Metrics

Dec -03

Source: zacks.com

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Edgestream Partners L.P. Purchases 45,391 Shares of Toll Brothers Inc. $TOL

Dec -03

Source: defenseworld.net

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Toll Brothers Inc. $TOL Stock Holdings Cut by American Century Companies Inc.

Dec -03

Source: defenseworld.net

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Toll Brothers Inc. $TOL Stock Holdings Lifted by Advantage Alpha Capital Partners LP

Nov -28

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
Toll Brothers

A-Score: 5.7/10

Value: 6.8

Growth: 8.1

Quality: 6.7

Yield: 2.0

Momentum: 4.0

Volatility: 6.3

1-Year Total Return ->

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Stock-Card
Taylor Morrison

A-Score: 5.4/10

Value: 7.9

Growth: 5.7

Quality: 7.2

Yield: 0.0

Momentum: 5.0

Volatility: 6.7

1-Year Total Return ->

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Stock-Card
M/I Homes

A-Score: 5.4/10

Value: 7.8

Growth: 8.2

Quality: 7.0

Yield: 0.0

Momentum: 3.5

Volatility: 5.7

1-Year Total Return ->

View Full Report
Stock-Card
Meritage Homes

A-Score: 5.2/10

Value: 8.4

Growth: 5.3

Quality: 6.5

Yield: 3.0

Momentum: 2.0

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
KB Home

A-Score: 4.9/10

Value: 6.2

Growth: 7.1

Quality: 5.0

Yield: 3.0

Momentum: 2.5

Volatility: 5.7

1-Year Total Return ->

View Full Report
Stock-Card
Century Communities

A-Score: 4.9/10

Value: 7.8

Growth: 7.6

Quality: 4.6

Yield: 3.0

Momentum: 1.5

Volatility: 5.0

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

140.76$

Current Price

140.76$

Potential

-0.00%

Expected Cash-Flows