As of June 9, 2025, Toll Brothers Inc's estimated intrinsic value ranges from $160.84 to $223.86 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $223.86 | +108.6% |
| Discounted Cash Flow (5Y) | $163.22 | +52.1% |
| Dividend Discount Model (Multi-Stage) | $183.88 | +71.3% |
| Dividend Discount Model (Stable) | $160.84 | +49.9% |
| Earnings Power Value | $171.65 | +59.9% |
Is Toll Brothers Inc (TOL) undervalued or overvalued?
With the current market price at $107.33, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Toll Brothers Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.68 | 0.71 |
| Cost of equity | 7.0% | 8.8% |
| Cost of debt | 5.0% | 5.0% |
| Tax rate | 24.4% | 24.5% |
| Debt/Equity ratio | 0.27 | 0.27 |
| After-tax WACC | 6.3% | 7.8% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $163 | $18,164M | 73.2% |
| 10-Year Growth | $224 | $24,126M | 60.2% |
| 5-Year EBITDA | $140 | $15,861M | 69.4% |
| 10-Year EBITDA | $186 | $20,397M | 53.0% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $1,323M |
| Discount Rate (WACC) | 7.8% - 6.3% |
| Enterprise Value | $17,041M - $20,944M |
| Net Debt | $2,114M |
| Equity Value | $14,927M - $18,830M |
| Outstanding Shares | 98M |
| Fair Value | $152 - $191 |
| Selected Fair Value | $171.65 |
| Metric | Value |
|---|---|
| Market Capitalization | $10554M |
| Enterprise Value | $12668M |
| Trailing P/E | 7.65 |
| Forward P/E | 6.98 |
| Trailing EV/EBITDA | 6.15 |
| Current Dividend Yield | 90.37% |
| Dividend Growth Rate (5Y) | 13.34% |
| Debt-to-Equity Ratio | 0.27 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $67.16 |
| Discounted Cash Flow (5Y) | 25% | $40.81 |
| Dividend Discount Model (Multi-Stage) | 20% | $36.78 |
| Dividend Discount Model (Stable) | 15% | $24.13 |
| Earnings Power Value | 10% | $17.17 |
| Weighted Average | 100% | $186.03 |
Based on our comprehensive valuation analysis, Toll Brothers Inc's weighted average intrinsic value is $186.03, which is approximately 73.3% above the current market price of $107.33.
Key investment considerations:
Given these factors, we believe Toll Brothers Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.