Critical Analysis: Toll Brothers (TOL) vs. Its Rivals

Toll Brothers (NYSE:TOL) is one of 150 publicly-traded companies in the “Household Durables” industry, but how does it contrast to its peers? We will compare Toll Brothers to similar companies based on the strength of its risk, analyst recommendations, institutional ownership, profitability, earnings, dividends and valuation.

Dividends

Toll Brothers pays an annual dividend of $1.04 per share and has a dividend yield of 0.7%. Toll Brothers pays out 8.3% of its earnings in the form of a dividend. As a group, “Household Durables” companies pay a dividend yield of 4.1% and pay out 32.6% of their earnings in the form of a dividend. Toll Brothers has increased its dividend for 5 consecutive years.

Profitability

This table compares Toll Brothers and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Toll Brothers	11.14%	14.21%	8.24%
Toll Brothers Competitors	-2.57%	-17.04%	1.23%

Earnings & Valuation

This table compares Toll Brothers and its peers revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Toll Brothers	$10.97 billion	$1.35 billion	12.46
Toll Brothers Competitors	$130.89 billion	$313.99 million	9.46

Toll Brothers’ peers have higher revenue, but lower earnings than Toll Brothers. Toll Brothers is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Analyst Ratings

This is a summary of recent ratings and target prices for Toll Brothers and its peers, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Toll Brothers	1	4	14	1	2.75
Toll Brothers Competitors	1812	7439	8166	316	2.39

Toll Brothers presently has a consensus target price of $167.40, indicating a potential upside of 7.82%. As a group, “Household Durables” companies have a potential upside of 40.73%. Given Toll Brothers’ peers higher probable upside, analysts clearly believe Toll Brothers has less favorable growth aspects than its peers.

Volatility and Risk

Toll Brothers has a beta of 1.3, suggesting that its stock price is 30% more volatile than the S&P 500. Comparatively, Toll Brothers’ peers have a beta of 1.77, suggesting that their average stock price is 77% more volatile than the S&P 500.

Insider and Institutional Ownership

91.8% of Toll Brothers shares are held by institutional investors. Comparatively, 53.6% of shares of all “Household Durables” companies are held by institutional investors. 1.4% of Toll Brothers shares are held by company insiders. Comparatively, 18.3% of shares of all “Household Durables” companies are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

Toll Brothers beats its peers on 10 of the 15 factors compared.

Toll Brothers Company Profile

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. It designs, builds, markets, and sells condominiums through Toll Brothers City Living. The company also develops a range of single-story living and first-floor primary bedroom suite home designs, as well as communities with recreational amenities, such as golf courses, marinas, pool complexes, country clubs, and fitness and recreation centers; and develops, operates, and rents apartments. In addition, it provides various interior fit-out options, such as flooring, wall tile, plumbing, cabinets, fixtures, appliances, lighting, and home-automation and security technologies. Further, the company owns and operates architectural, engineering, mortgage, title, land development, insurance, smart home technology, landscaping, lumber distribution, house component assembly, and component manufacturing operations. It serves luxury first-time, move-up, empty-nester, active-adult, and second-home buyers. Toll Brothers, Inc. was founded in 1967 and is headquartered in Fort Washington, Pennsylvania.