Morningstar Rating

Stock Research and Analysis

by James Krapfel, CFA

Bulls Say

The firm's comparatively weaker margin recovery this cycle is more reflective of the longer time it takes for higher selling prices to flow through revenue (longer build times), and not anything structural in nature.
Toll Brothers is positioned well within the luxury end of the housing market, where buyers exhibit greater financial health and lower price elasticity and public competition is more limited.
Toll Brothers' ventures in City Living and Apartment Living will help the firm take advantage of greater growth opportunities in multifamily living and help smooth out earnings. Read more 

Bears Say

A recovery to midcycle sales conditions will be slow and arduous, given continued mortgage financing challenges, households' increased preference to rent rather than own, and a possible environment of rising mortgage interest rates.
Toll Brothers' recent ventures in City Living and Apartment Living raise the risk profile for a firm that already scores very high on structural capital intensity.
It is becoming increasingly difficult to source land "on the corner of Main and Main," given a shortage of large tracts of undeveloped land and an increasingly cumbersome land permitting process. Read more 

Management

Brothers Bob and Bruce Toll founded Toll Brothers in 1967. Bob Toll, 73, was CEO from inception until June 2010, when he handed the reins to Douglas Yearley. Bob Toll remains executive chairman of the board and has gradually handed more of the day-to-day   Read more 

Profile

Toll Brothers, with headquarters in Horsham, Pennsylvania, is a homebuilder targeting the move-up, active adult, second home, and luxury buyer with a $725,000 average price   Read more 

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