Toll Brothers, Inc. (NYSE: TOL)

Sector: Consumer Cyclical Industry: Residential Construction CIK: 0000794170
Market Cap 29.11 Bn
P/B 7.19
P/E 76.92
P/S 7.08
ROIC (Qtr) 11.73
Div Yield % 0.15
Rev 1y % (Qtr) 2.70
Total Debt (Qtr) 2.79 Bn
Debt/Equity (Qtr) 0.34
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About

Investment thesis

Bull case

  • Strong tangible asset base of 14.52B provides 5.21x coverage of total debt 2.79B, indicating robust asset backing and low credit risk.
  • Operating cash flow of 1.11B provides strong 36.08x coverage of stock compensation 30.83M, indicating sustainable incentive practices.
  • Robust free cash flow of 1.03B exceeds capital expenditure of 86.19M by 11.91x, indicating strong organic growth funding capability.
  • Operating cash flow of 1.11B provides strong 6.28x coverage of tax liabilities 177.12M, showing excellent fiscal position.
  • Cash reserves of 1.26B provide comfortable 7.11x coverage of tax obligations 177.12M, showing strong fiscal management.

Bear case

  • Operating cash flow of 1.11B barely covers its investment activities of (310.03M), with a coverage ratio of -3.59, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 1.26B against inventory of 10.68B, the 0.12 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 1.11B provides thin coverage of dividend payments of (97.08M) with a -11.46 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 1.26B provide limited coverage of acquisition spending of (222.16M), which is -5.67x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Free cash flow of 1.03B represents just -37.89x of debt issuance (27.08M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Geographical Breakdown of Revenue (2025)

Peer comparison

Companies in the Residential Construction
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 DHI Horton D R Inc /De/ 56.51 Bn 105.92 7.04 5.55 Bn
2 TOL Toll Brothers, Inc. 29.11 Bn 76.92 7.08 2.79 Bn
3 PHM Pultegroup Inc/Mi/ 28.02 Bn 12.63 1.62 2.16 Bn
4 LEN Lennar Corp /New/ 23.56 Bn -229.13 7.79 4.08 Bn
5 NVR Nvr Inc 21.52 Bn 16.06 2.13 1.05 Bn
6 IBP Installed Building Products, Inc. 8.62 Bn -487.54 19.34 0.99 Bn
7 TMHC Taylor Morrison Home Corp 6.86 Bn 8.06 0.82 2.26 Bn
8 MTH Meritage Homes CORP 5.67 Bn 12.52 0.97 1.83 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.20 1.47
EV to Cash from Ops. EV/CFO 93.60 43.01
EV to Debt EV to Debt 11.46 37.82
EV to EBIT EV/EBIT 58.07 48.76
EV to EBITDA EV/EBITDA 65.96 112.58
EV to Free Cash Flow [EV/FCF] EV/FCF 97.96 11.82
EV to Market Cap EV to Market Cap 1.10 1.26
EV to Revenue EV/Rev 7.77 3.28
Price to Book Value [P/B] P/B 7.19 9.23
Price to Earnings [P/E] P/E 76.92 -14.72
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 13.87 8.23
Dividend Payout Ratio % Div Payout % (Qtr) 7.20 6.29
Dividend per Basic Share Div per Share (Qtr) 0.98 0.54
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 9.45 96.10
Interest Coverage Int. cover (Qtr) 0.00 142.03
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -18.88 27.50
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -3.38 196.58
Dividend Growth (1y) % Div 1y % (Qtr) 8.89 4.02
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -14.30 -29.39
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -15.02 -30.05
EBIT Growth (1y) % EBIT 1y % (Qtr) -14.11 -31.27
EBT Growth (1y) % EBT 1y % (Qtr) -14.11 -32.05
EPS Growth (1y) % EPS 1y % (Qtr) -10.29 -25.62
FCF Growth (1y) % FCF 1y % (Qtr) 9.44 341.90
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -8.87 -14.63
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.76 1.00
Cash Payout Ratio Cash Payout (Qtr) 0.08 0.13
Cash Ratio Cash Ratio 0.00 0.23
Current Ratio Current Ratio 0.00 0.81
Debt to Equity Ratio Debt/Equity (Qtr) 0.34 0.58
Interest Cover Ratio Int Coverage (Qtr) 0.00 142.03
Times Interest Earned Times Interest Earned (Qtr) 0.00 142.03
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 17.10 10.57
EBIT Margin % EBIT Margin % (Qtr) 16.33 9.64
EBT Margin % EBT Margin % (Qtr) 16.33 9.44
Gross Margin % Gross Margin % (Qtr) 25.10 22.26
Net Profit Margin % Net Margin % (Qtr) 12.30 7.17