Toll Brothers, Inc. (TOL) Stock Valuation — PE Analysis
Residential Construction · NYSE
Current Price
$147.13
PE Ratio (TTM)
10.9x
Intrinsic Value
$153.58
+4.2% 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 PE valuation
A base case PE valuation for TOL estimates a fair value of about $153.58 per share, against a current price of $147.13. The model assumes 1.6% annual earnings growth, a 11x target PE multiple, and a 10% discount rate.
Intrinsic Value
$153.58
Margin of safety
+4.2%
Expected annual return
+0.9%
Base case assumptions: 1.6% annual earnings growth, 11x target PE, 10% discount rate, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the TOL PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for Toll Brothers, Inc. respond.
Open PE 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 PE Stock Valuation Data
PE Ratio (TTM)
10.9x
PEG Ratio
n/m
Earnings Yield
9.20%
ROE (TTM)
15.5%
Revenue/Share (TTM)
$116.09
Dividend Yield
0.69%
Debt/Equity
0.34x
Frequently Asked Questions
What is the PE ratio of TOL?
The trailing twelve-month PE ratio of TOL reflects how much investors pay per dollar of Toll Brothers, Inc.'s earnings. This metric is most useful when compared to Residential Construction peers and the company's own historical range.
Is TOL overvalued based on PE ratio?
TOL's PE of 10.9x combined with a PEG ratio of -5.28 provides a growth-adjusted perspective. TOL has negative earnings, so its PE and PEG ratios are not meaningful here and cannot tell you whether the stock is over or undervalued. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Residential Construction, a DCF analysis may be more appropriate.
How do I value TOL stock using PE ratio?
To value Toll Brothers, Inc. using PE: (1) Compare the current PE (10.9x) against the Residential Construction median to assess relative pricing, (2) check the PEG ratio (-5.28) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of TOL?
TOL's PEG ratio is -5.28, calculated by dividing the PE ratio (10.9x) by the expected earnings growth rate. Because TOL has negative earnings, its PEG ratio is not meaningful and should not be read as a sign of under or overvaluation. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for TOL stock valuation?
PE ratio gives a quick relative read — how TOL is priced versus Residential Construction peers. DCF provides an absolute value based on projected free cash flows. For TOL, with a strong ROE of 15.5%, both methods are worth using — PE for a market-relative check, DCF to stress-test whether fundamentals justify the price. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See TOL DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Consumer Cyclical valuationsP/E and DCF value TOL with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.