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Is Toll Brothers (TOL) Stock Undervalued Right Now?

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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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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.

One company to watch right now is Toll Brothers (TOL - Free Report) . TOL is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 7.21. This compares to its industry's average Forward P/E of 7.35. Over the past 52 weeks, TOL's Forward P/E has been as high as 11.65 and as low as 6.50, with a median of 9.45.

TOL is also sporting a PEG ratio of 0.18. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. TOL's industry has an average PEG of 0.36 right now. TOL's PEG has been as high as 2.52 and as low as 0.18, with a median of 0.61, all within the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Toll Brothers is likely undervalued currently. And when considering the strength of its earnings outlook, TOL sticks out at as one of the market's strongest value stocks.


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