TOL
Toll Brothers, Inc.
$147.13
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Fair Value
Trading 24.7% below fair value
You pay
$147.13
Bear
$148.29
Fair
$195.49
Bull
$242.69
Bear
$148.29
+0.8%
$12.36 × 14x + net cash
Fair
$195.49
+32.9%
$12.36 × 18x + net cash
Bull
$242.69
+65.0%
$12.36 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($12.36)
Implied Market Multiple
11.9x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $173.88 from 46 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $195.49 per share.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing