Morningstar Rating

Stock Research and Analysis

by James Krapfel, CFA

Bulls Say

The firm's more lackluster recent margin performance 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, Gibraltar, and Apartments 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 likely environment of rising mortgage interest rates.
Toll Brothers' recent ventures in City Living and Apartments raise the risk profile for the 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, 72, had been the CEO from inception until June 2010, when he handed the reins to Douglas Yearley. The former remains executive chairman of the board and has gradually handed more of   Read more 

Profile

Toll Brothers, with headquarters in Horsham, Pa., is a homebuilder targeting the move-up, active adult, second home, and luxury buyer with a $639,000 average price point   Read more 

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