- Oops!Something went wrong.Please try again later.
Have you been paying attention to shares of Toll Brothers (TOL)? Shares have been on the move with the stock up 7.5% over the past month. The stock hit a new 52-week high of $60.1 in the previous session. Toll Brothers has gained 36.4% since the start of the year compared to the 18.8% move for the Zacks Construction sector and the 23% return for the Zacks Building Products - Home Builders industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on February 23, 2021, Toll Brothers reported EPS of $0.76 versus consensus estimate of $0.49.
For the current fiscal year, Toll Brothers is expected to post earnings of $5.2 per share on $8.31 billion in revenues. This represents a 53.24% change in EPS on a 17.38% change in revenues. For the next fiscal year, the company is expected to earn $6.49 per share on $9.33 billion in revenues. This represents a year-over-year change of 24.63% and 12.33%, respectively.
Toll Brothers may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Toll Brothers has a Value Score of A. The stock's Growth and Momentum Scores are C and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 11.4X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 14.7X versus its peer group's average of 10.9X. Additionally, the stock has a PEG ratio of 0.64. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Toll Brothers currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Toll Brothers passes the test. Thus, it seems as though Toll Brothers shares could have a bit more room to run in the near term.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Toll Brothers Inc. (TOL) : Free Stock Analysis Report
To read this article on Zacks.com click here.