Back to top

Image: Bigstock

Are Investors Undervaluing Toll Brothers (TOL) Right Now?

Read MoreHide Full Article

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

Toll Brothers (TOL - Free Report) is a stock many investors are watching right now. TOL is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 6.89, while its industry has an average P/E of 6.91. Over the past 52 weeks, TOL's Forward P/E has been as high as 15.40 and as low as 6.50, with a median of 9.49.

We also note that TOL holds a PEG ratio of 0.57. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. TOL's PEG compares to its industry's average PEG of 0.64. TOL's PEG has been as high as 4.11 and as low as 0.41, with a median of 0.62, all within the past year.

Another notable valuation metric for TOL is its P/B ratio of 1.47. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. TOL's current P/B looks attractive when compared to its industry's average P/B of 1.52. Over the past 12 months, TOL's P/B has been as high as 1.68 and as low as 1.05, with a median of 1.41.

These are just a handful of the figures considered in Toll Brothers's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that TOL is an impressive value stock right now.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Toll Brothers Inc. (TOL) - free report >>

Published in