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Toll Brothers (TOL) Outpaces Stock Market Gains: What You Should Know

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In the latest trading session, Toll Brothers (TOL - Free Report) closed at $56.05, marking a +1.47% move from the previous day. The stock outpaced the S&P 500's daily gain of 0.84%. Meanwhile, the Dow gained 1.06%, and the Nasdaq, a tech-heavy index, added 0.1%.

Prior to today's trading, shares of the home builder had lost 15.61% over the past month. This has lagged the Construction sector's loss of 8.7% and the S&P 500's loss of 4.03% in that time.

Wall Street will be looking for positivity from Toll Brothers as it approaches its next earnings report date. This is expected to be February 22, 2022. In that report, analysts expect Toll Brothers to post earnings of $1.12 per share. This would mark year-over-year growth of 47.37%. Our most recent consensus estimate is calling for quarterly revenue of $1.77 billion, up 13.24% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $9.94 per share and revenue of $10.35 billion, which would represent changes of +49.92% and +17.73%, respectively, from the prior year.

Any recent changes to analyst estimates for Toll Brothers should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 2.43% higher. Toll Brothers is currently a Zacks Rank #2 (Buy).

Digging into valuation, Toll Brothers currently has a Forward P/E ratio of 5.56. For comparison, its industry has an average Forward P/E of 4.55, which means Toll Brothers is trading at a premium to the group.

We can also see that TOL currently has a PEG ratio of 0.21. 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. Building Products - Home Builders stocks are, on average, holding a PEG ratio of 0.52 based on yesterday's closing prices.

The Building Products - Home Builders industry is part of the Construction sector. This group has a Zacks Industry Rank of 30, putting it in the top 12% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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