Toll Brothers, Inc. (TOL) Stock Valuation — DCF Analysis
Residential Construction · NYSE
Current Price
$150.32
Intrinsic Value
$153.42
+2.0% margin of safety
COMPETITIVE MOAT
↑Luxury Brand Recognition
Toll Brothers cultivates a strong reputation for high-end, luxury homes. This brand appeal attracts a discerning customer base willing to pay a premium for quality and exclusivity.
↑Geographic Diversification
The company operates across numerous states and metropolitan areas. This diversification mitigates risks associated with localized housing market downturns and allows them to capitalize on varied regional demand.
↑Land Acquisition Expertise
Toll Brothers demonstrates skill in acquiring prime land parcels in desirable locations. This strategic land control provides a pipeline for future development and limits competition in sought-after areas.
INVESTMENT RISKS
↓Interest Rate Sensitivity
Rising interest rates significantly impact affordability for homebuyers. This can lead to decreased demand and slower sales cycles for Toll Brothers' higher-priced homes.
↓Economic Downturn Impact
Luxury housing is particularly vulnerable to economic recessions. Job losses and reduced consumer confidence can severely curtail demand for high-end properties.
↓Competition in Luxury Segment
While Toll Brothers targets the luxury market, it faces competition from other builders and custom home developers. Maintaining differentiation and perceived value is crucial.
Base case
TOL base case valuation
A base case discounted cash flow model for TOL estimates an intrinsic value of about $153.42 per share, against a current price of $150.32. The model assumes 1.1% annual free cash flow growth, a 10.0% discount rate, and a 12x exit multiple.
Intrinsic Value
$153.42
Margin of safety
+2.0%
Expected annual return
+0.4%
Base case assumptions: 1.1% annual growth, 10.0% discount rate, 12x exit multiple, 5 year projection. Data as of 2026-06-15.
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
8.65%
Debt/Equity
0.34x
Based on trailing twelve-month data, TOL shows a free cash flow per share of $12.77 and a ROIC of 10.6%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 11.6x and FCF yield of 8.65% are important context metrics when evaluating TOL's stock valuation relative to peers.
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 $150.32, 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 8.65%. This relatively low P/FCF may suggest the stock is attractively priced relative to its cash generation. 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 2026-06-15. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.