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$20.36 1.49 (7.90%)
10/10/2008 4:01 PM

Toll Brothers, Inc. (TOL)

CAPS Rating:
*

Designs, builds, markets & arranges financing for single-family detached & attached homes in luxury residential communities. Also involved in projects building, or converting existing rental apartment buildings into, high-, mid- & low-rise luxury homes.

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Avatar pachelbel101 (< 20) Submitted: 2/28/07 4:43 PM : Underperform Start Price: $29.40 TOL Score: -5.74

The current P/E is 8.5, and the forward p/e is 18.13. This means the earnings are going to take quite a tumble. The market won't let the P/E increase, let alone double, on shrinking earnings. To keep the P/E somewhere near 8.5, the stock price will decrease 40-60% over the next year. It probably won't go down much until each earnings release because value investors can't fathom the P/E going under 8 and will hold it there until decreased earnings bloat the P/E. Then the price will drop to compensate.

But in a year, throw your money at it because the earnings will explode as will the price - maybe even to a higher P/E than 8.5

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