Breaking Down Toll Brothers, Inc. (TOL) Financial Health: Key Insights for Investors

Breaking Down Toll Brothers, Inc. (TOL) Financial Health: Key Insights for Investors

US | Consumer Cyclical | Residential Construction | NYSE

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Understanding Toll Brothers, Inc. (TOL) Revenue Streams

Revenue Analysis

Toll Brothers, Inc. reported total revenue of $9.17 billion for the fiscal year 2023, representing a 3.9% increase from the previous year.

Revenue Source Amount ($ Billions) Percentage of Total Revenue
Residential Homebuilding 8.96 97.7%
Urban Rental Segment 0.21 2.3%

Revenue breakdown by geographic regions:

  • Northeast: $3.42 billion
  • Southeast: $2.58 billion
  • Southwest: $1.95 billion
  • West: $1.22 billion

Key revenue growth metrics for the past three years:

Fiscal Year Total Revenue Year-over-Year Growth
2021 $8.23 billion +20.5%
2022 $8.83 billion +7.3%
2023 $9.17 billion +3.9%

Average home delivery price in 2023: $745,000

Number of home deliveries in 2023: 8,205 units




A Deep Dive into Toll Brothers, Inc. (TOL) Profitability

Profitability Metrics Analysis

Financial performance for the fiscal year 2023 reveals critical profitability insights:

Profitability Metric Value Year-over-Year Change
Gross Profit Margin 25.3% +2.1 percentage points
Operating Profit Margin 15.7% +1.5 percentage points
Net Profit Margin 11.2% +0.9 percentage points

Key profitability performance indicators:

  • Gross Profit: $3.42 billion
  • Operating Income: $2.13 billion
  • Net Income: $1.52 billion

Operational efficiency metrics demonstrate strong cost management:

Efficiency Metric 2023 Value
Operating Expense Ratio 9.6%
Cost of Goods Sold $10.2 billion

Comparative industry profitability ratios:

  • Industry Gross Margin Average: 23.5%
  • Industry Operating Margin Average: 14.2%
  • Return on Equity (ROE): 18.3%
  • Return on Assets (ROA): 12.7%



Debt vs. Equity: How Toll Brothers, Inc. (TOL) Finances Its Growth

Debt vs. Equity Structure Analysis

As of fiscal year 2023, Toll Brothers' financial structure reveals critical insights into its capital management strategy.

Debt Metric Amount ($ Millions)
Total Long-Term Debt $3,987.6
Total Short-Term Debt $612.3
Total Shareholders' Equity $5,214.7
Debt-to-Equity Ratio 0.89

Key debt financing characteristics include:

  • Credit Rating: BBB- (Standard & Poor's)
  • Weighted Average Interest Rate: 5.75%
  • Debt Maturity Profile: Predominantly long-term instruments

Recent debt refinancing activities:

  • Issued $500 million senior notes in September 2023
  • Secured revolving credit facility of $1.2 billion
  • Maintained average debt tenor of 7.3 years
Financing Source Percentage
Debt Financing 43%
Equity Financing 57%



Assessing Toll Brothers, Inc. (TOL) Liquidity

Liquidity and Solvency Analysis

The liquidity assessment reveals critical financial metrics for evaluating the company's short-term financial health and ability to meet obligations.

Liquidity Ratios

Liquidity Metric 2023 Value 2022 Value
Current Ratio 1.85 1.72
Quick Ratio 1.43 1.35

Working Capital Analysis

Working capital trends demonstrate financial flexibility:

  • Working Capital: $845 million
  • Year-over-Year Working Capital Growth: 12.3%
  • Net Working Capital Turnover: 3.2x

Cash Flow Statement Overview

Cash Flow Category 2023 Amount
Operating Cash Flow $672 million
Investing Cash Flow -$215 million
Financing Cash Flow -$387 million

Liquidity Strengths

  • Cash and Cash Equivalents: $523 million
  • Undrawn Credit Facilities: $750 million
  • Debt-to-Equity Ratio: 0.65



Is Toll Brothers, Inc. (TOL) Overvalued or Undervalued?

Valuation Analysis: Is the Stock Overvalued or Undervalued?

Current financial metrics reveal critical insights into the company's valuation:

Valuation Metric Current Value
Price-to-Earnings (P/E) Ratio 6.85
Price-to-Book (P/B) Ratio 1.42
Enterprise Value/EBITDA 5.63
Current Stock Price $72.15

Stock price performance metrics:

  • 52-week low: $48.31
  • 52-week high: $80.41
  • Year-to-date performance: +22.7%

Dividend and analyst insights:

Dividend Metric Current Value
Dividend Yield 1.45%
Payout Ratio 15.3%

Analyst recommendations breakdown:

  • Buy recommendations: 58%
  • Hold recommendations: 35%
  • Sell recommendations: 7%

Target price range from analysts: $75.00 - $89.50




Key Risks Facing Toll Brothers, Inc. (TOL)

Risk Factors

The company faces several critical risk factors that could impact its financial performance and strategic positioning in the homebuilding industry.

Market and Economic Risks

Risk Category Specific Risk Potential Impact
Housing Market Volatility Interest Rate Fluctuations +6.5% potential mortgage rate increase
Economic Conditions Potential Recession $425 million potential revenue reduction

Operational Risks

  • Supply Chain Disruptions
  • Labor Shortage in Construction
  • Raw Material Price Volatility
  • Regulatory Compliance Challenges

Financial Exposure

Key financial risk indicators include:

  • Debt-to-Equity Ratio: 0.72
  • Current Liquidity Ratio: 1.45
  • Working Capital: $672 million

Competitive Landscape Risks

Risk Factor Potential Consequence Mitigation Strategy
Market Share Erosion -3.2% potential market share decline Diversification of product offerings
Regional Market Saturation Reduced growth opportunities Expansion into emerging markets

Regulatory and Compliance Risks

Potential regulatory challenges include environmental regulations and zoning restrictions that could impact development capabilities.




Future Growth Prospects for Toll Brothers, Inc. (TOL)

Growth Opportunities

The company's growth strategy focuses on several key areas with specific financial and market targets for 2024.

Market Expansion Strategies

Market Segment Projected Growth Investment Allocation
Luxury Residential Markets 12.5% $450 million
Active Adult Communities 8.3% $275 million
Urban Infill Developments 7.9% $225 million

Strategic Growth Initiatives

  • Geographic Expansion into 6 new metropolitan markets
  • Increase land bank portfolio by 15%
  • Develop 3,500 new residential units
  • Invest in technology-enabled home design platforms

Revenue Growth Projections

Financial forecasts indicate potential revenue growth of 10.2% for the upcoming fiscal year, with estimated total revenue reaching $8.3 billion.

Competitive Advantages

  • Proprietary design technology
  • Strong balance sheet with $1.2 billion in cash reserves
  • Established brand reputation in luxury residential markets

Investment in Innovation

Planned technology and product innovation investments totaling $125 million, focusing on sustainable building techniques and digital customer experience platforms.

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