Toll Brothers, Inc. (NYSE:TOL) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of TOL, it is a financially-healthy company with a a strong track record of performance, trading at a great value. Below is a brief commentary on these key aspects. For those interested in digger a bit deeper into my commentary, take a look at the report on Toll Brothers here.
Good value with proven track record
TOL’s strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This suggests prudent control over cash and cost by management, which is an important determinant of the company’s health. Debt funding requires timely payments on interest to lenders. TOL’s earnings sufficiently covered its interest in the prior year, which indicates there’s low risk associated with the company not being able to meet these key expenses.
TOL’s shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of TOL’s earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the consumer durables industry, TOL is also trading below its peers, relative to earnings generated. This supports the theory that TOL is potentially underpriced.
For Toll Brothers, there are three pertinent aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for TOL’s future growth? Take a look at our free research report of analyst consensus for TOL’s outlook.
- Dividend Income vs Capital Gains: Does TOL return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from TOL as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of TOL? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.