Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, solid stock price performance, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins.
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Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 28.7%. Since the same quarter one year prior, revenues rose by 39.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- TOLL BROTHERS INC has improved earnings per share by 44.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, TOLL BROTHERS INC turned its bottom line around by earning $0.24 versus -$0.03 in the prior year. This year, the market expects an improvement in earnings ($0.65 versus $0.24).
- Powered by its strong earnings growth of 44.00% and other important driving factors, this stock has surged by 121.30% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- TOL's debt-to-equity ratio of 0.73 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further.
Toll Brothers, Inc., together with its subsidiaries, designs, builds, markets, and arranges finance for single-family detached and attached homes in luxury residential communities. The company has a P/E ratio of 60.4, below the average materials & construction industry P/E ratio of 72.8 and above the S&P 500 P/E ratio of 17.7. Toll Brothers has a market cap of $5.12 billion and is part of the
industry. Shares are up 59.6% year to date as of the close of trading on Friday.
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--Written by a member of TheStreet Ratings Staff.