TOL

Toll Brothers is a high-quality luxury homebuilder trading at a clearly modest valuation. FY2025 revenue held roughly flat at $11.0B (+1.1%) while net income slipped 14.3% to $1.35B and diluted EPS came in at $13.49 — a normal mid-cycle moderation after the post-pandemic peak, not a collapse. Even after the decline, the company earned a 16.3% ROE on a 12.3% net margin and 15.7% operating margin. At $155.67 the stock trades at just an 11.5 P/E and a 1.3 P/S, which embeds meaningful caution about the housing cycle.

Capital allocation is a standout. Toll bought back $651M of stock (shares outstanding fell 5.0% YoY) and paid $97.1M in dividends, while still growing book value — equity rose 7.8% to $8.27B and retained earnings reached $8.57B. The balance sheet is sound for a builder, with $6.23B of liabilities against $8.27B of equity (0.75x) and $1.26B of cash. Operating cash flow of $1.11B (up 10.1%) funded those returns comfortably. Toll's vertical integration — its Toll Integrated Systems subsidiary manufactures wall panels, trusses and millwork — supports cost control and quality, as the filing describes.