On Thursday, BofA Securities analyst updated the financial outlook for Toll Brothers (NYSE: NYSE:TOL) shares, a leading construction company, by increasing the price target to $160 from the previous $150.
This adjustment comes after Toll Brothers reported earnings per share (EPS) for the third fiscal quarter of 2024 (ended July) that exceeded both the firm's and consensus estimates. The company also uplifted its full-year guidance.
The analyst noted that Toll Brothers missed its order targets, but the impact was mitigated as delivery numbers were only slightly below forecasts, thanks to a stronger backlog conversion.
Based on these results, BofA Securities has revised its fiscal 2024 EPS estimate for Toll Brothers upwards to $14.70 from the former $14.11, taking into account an improved gross margin and a positive outlook for share repurchase activities.
Maintaining a Buy rating, the analyst emphasized the attractive valuation of Toll Brothers' stock compared to other builders with similar returns on equity (ROE).
The company's ROE stands at 22%, which is an increase from the previously projected 21%. The raised price objective of $160 is grounded on a 1.9 times price-to-forward 12-month book value.
The positive assessment from BofA Securities reflects confidence in Toll Brothers' financial performance and market position. The company's ability to surpass earnings expectations and raise its full-year forecast demonstrates its operational strength in a competitive industry. The updated price target suggests that the firm's stock may offer investment value, especially when considering its ROE relative to peers.
InvestingPro Insights
As Toll Brothers (NYSE: TOL) garners a positive outlook from BofA Securities, the real-time metrics from InvestingPro reinforce the company's strong financial position. With a robust market capitalization of $14.24 billion and a favorable P/E ratio of 9.61, Toll Brothers stands out in the construction sector. Notably, the company's commitment to shareholder returns is evident through a dividend yield of 0.65% and a consistent track record of raising dividends, having done so for 3 consecutive years, an aspect that income-focused investors may find particularly appealing.
Toll Brothers has also demonstrated significant investor confidence with a price return of 87.41% over the last year, indicating a substantial appreciation in stock value that aligns with the analyst's revised EPS estimate and price target uplift. Furthermore, the company's liquidity position is reassuring, with liquid assets surpassing short-term obligations, which is a testament to its financial health and risk management.
For those considering a deeper dive into Toll Brothers' investment potential, InvestingPro offers additional insights and tips, including 14 more InvestingPro Tips that can be found at https://www.investing.com/pro/TOL. These tips provide valuable perspectives on the company's earnings revisions, trading patterns, and profitability forecasts, which could further guide investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.