Toll Brothers, Inc. (TOL) Intrinsic Value & DCF Valuation
Residential Construction · NYSE
Current Price
$150.21
Intrinsic Value
$157.65
+4.7% margin of safety
What Is Toll Brothers, Inc.'s Intrinsic Value?
As of 2026-07-29, the base-case DCF model estimates the intrinsic value of Toll Brothers, Inc. (TOL) at $157.65 per share, compared with a market price of $150.21, a margin of safety of +4.7%. The base case assumes 1.8% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $120.87 to $200.6. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How the DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is Toll Brothers, Inc. (TOL) Undervalued?
At $150.21, TOL trades about 4.7% below the base-case intrinsic value estimate. That is a real discount, but it stays short of the 30% margin of safety required before calling a stock undervalued.
COMPETITIVE MOAT
↑Brand Recognition in Luxury Segment
Toll Brothers cultivates a strong brand reputation for high-end homes. This premium positioning attracts a discerning buyer base willing to pay for quality and exclusivity.
↑Scale and Land Acquisition Expertise
The company's extensive land inventory and development experience provide a significant advantage. This scale allows for efficient project execution and access to prime locations.
↑Diversified Geographic Footprint
Operating across numerous states and markets reduces reliance on any single region. This diversification mitigates localized economic downturns and housing market fluctuations.
INVESTMENT RISKS
↓Economic Downturn and Housing Market Volatility
A broad economic recession or significant housing market correction could severely impact sales and profitability. Consumer confidence plays a crucial role.
↓Regulatory and Permitting Hurdles
Complex and evolving zoning laws, environmental regulations, and permitting processes can cause project delays and increase development costs.
↓Competition from Other Builders
The residential construction industry is fragmented, with numerous competitors vying for market share. Smaller, more agile builders can sometimes offer more competitive pricing.
Base case
TOL base case valuation
Intrinsic Value
$157.65
Margin of safety
+4.7%
Expected annual return
+1.0%
Base case assumptions: 1.8% annual growth, 10.0% discount rate, 12x exit multiple, 5 year projection. Data as of 2026-07-29.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the TOL valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Toll Brothers, Inc. respond.
Open DCF Calculator for TOLCompany Overview
Toll Brothers, Inc. (TOL) stands as a prominent luxury homebuilder operating across the United States. The company, along with its various divisions, specializes in the design, construction, marketing, sale, and financing of upscale detached and attached residences within master-planned communities. Its operations are structured into two main divisions: Traditional Home Building and City Living. The latter specifically focuses on developing, constructing, and selling condominiums. Beyond its core homebuilding activities, Toll Brothers diversifies its portfolio by developing and managing golf courses and country clubs, acquiring and divesting land, and constructing, operating, and leasing apartment complexes. It further enhances its offerings by providing a wide array of interior design and finishing selections, encompassing everything from flooring and cabinetry to smart home systems and security features. The firm maintains a vertically integrated structure, with its own operations spanning architectural and engineering services, mortgage and title insurance, smart home technology, landscaping, lumber distribution, and the manufacturing and assembly of various housing components. Its clientele primarily consists of affluent buyers, including those seeking to upgrade their homes, empty-nesters, active adults, and individuals purchasing second homes. Toll Brothers has also forged a strategic alliance with Equity Residential to jointly develop new rental apartment communities across various U.S. markets. Established in 1967, the company's headquarters are situated in Fort Washington, Pennsylvania.
Financial Metrics — TOL Stock Valuation Data
Revenue/Share (TTM)
$116.09
FCF/Share (TTM)
$12.77
ROIC (TTM)
10.6%
ROE (TTM)
15.5%
P/FCF
11.6x
EV/EBITDA
8.9x
FCF Yield
8.66%
Debt/Equity
0.34x
On a trailing twelve-month basis, TOL generates free cash flow per share of $12.77 alongside a ROIC of 10.6%, both central inputs for a DCF valuation. Its P/FCF ratio of 11.6x and FCF yield of 8.66% then frame how TOL is priced against peers on a cash flow basis.
Frequently Asked Questions
What is the intrinsic value of TOL?
Toll Brothers, Inc. currently generates $12.77 in free cash flow per share. At the current price of $150.21, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is TOL undervalued?
TOL trades at a P/FCF ratio of 11.6x with a free cash flow yield of 8.66%. A low P/FCF means investors are paying less per dollar of free cash flow; whether that is cheap depends on the company's growth, cyclicality, and capital intensity. However, whether TOL is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value TOL stock using DCF?
To perform a DCF valuation on Toll Brothers, Inc.: (1) Start with the trailing free cash flow per share ($12.77) as the base, (2) project future FCF growth over 5-10 years based on Residential Construction industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting TOL's risk profile — with a debt-to-equity of 0.34x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to TOL?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Toll Brothers, Inc., this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Residential Construction trends, then discounting those amounts to today's dollars. TOL's ROIC of 10.6% shows moderate capital returns.
How does WACC affect TOL stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For TOL, with a debt-to-equity ratio of 0.34x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 8.9x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See TOL PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Consumer Cyclical valuationsDCF and P/E value TOL with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-07-29. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.