Toll Brothers, Inc. (TOL)

They are starting to move on some aggressive plays behind the scenes that will significantly benefit the company over time... I like what I am hearing, I think they will execute...... DIECBWT

Very undervalued. Yes, the housing bubble is supposed to be bursting and all, but I contend that TOL is priced for conditions in the industry to get much worse than I believe they're going to get. Further, Toll's high-end market is likely to be less affected by recessionary woes than the broader housing market.

housing is suffering prolonged and deep retraction.
there is no way we're seeing bottom at this moment.
I'd say it'll be until spring/summer of '09 before we see any sign of housing firming up. Until then, TOL is an underperformer in my view.

The luxury housing market will remain active as us baby boomers start looking for that "last house I'll ever buy". Since the stock has been more than halved since mid '05, I think this might be a good entry point.

They will go down hard in this terrible economy.

Home builders are going to continue to suffer as the bubble bursts.

Lots of talk right now about whether the housing market will have a soft landing or is crashing. Either way, I see house building stocks heading south faster than the S&P. Speculation is high right now and since the economic growth report missed its expected mark, I think the pessimist will win out for most large scale investors.

After so many months of great returns, I think investors are willing to take their profits and look elsewhere, especially if the overall market really turns south.

How can you not love such a honest CEO as Toll Brothers. I love how candid and open this man is to the little investors. Crammer has interviewed this "gentleman" and I love his straight shooting and talking style. I belive that Toll Brothers is a great place to park your money for some substantial profits for the next few years. We will have pull backs but I belive the incredible management at Toll Brothers will guide us through this Real Estate mess.

My conversative inventory mark-up to FMV results is a P/S of $50 based on asset value alone. It might take some time for this investment to catch up, but don't see the need for homes going away anytime soon.

housing market is still going down for 1st half of 2008

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

Picking a bottom is suicide; that said, when and if the housing market comes out of the doldrums, these guys will be there, strong, and they've been hit pretty hard already - over a long term, they should grow well.

Toll Brothers trades slightly above book value and is not only profitable, but had a FCF of over $90M for the past 6 months. While anyone can speculate on the near future of home building, a profitalbe company at book value should not have much of downside. Assuming that they are not buring cash of course. Because inventory makes up a very large part of the overall assets, there is a good argument that the book value is overstated. I do not want to take the time to figure out the true value of TOL's inventory, so take that into consideration.

If you can buy into the book value per share of $23 then the company trades close to book. If TOL hits the mean analyst estimate of $1.10 for 2007, then there is only a P/E of 4 factored into the current share price. That is pretty cheap.

Overall, wealthy people will still buy expensive homes regardless of higher mortgage rates, cyclical downturns, or subprime lending concerns. The company is situated where the wealthiest Americans are located as well. The only question regarding this company is how much longer or worse the housing recession will be.

housing is going down for the next 2-4 years, and toll brothers will lead the charge

The housing bill is a huge deal. I don't think people realize how big.

i'm pretty sure housing is about to crater, and that home builders will have expenses and liabilities that continue even after the market collapses.

They own property in developing areas, and think really long-term. Over 20 years - they can't lose.

This stock has been battered by the decline in housing but it's an overreaction. This housing situation is not going to last forever so I think the market is being short sighted. They tend to build high end homes at $500K+ which makes them a little less sensitive to the vagaries of the housing market. They also have a great inventory of land that is getting harder and harder to come by. Assuming that they slow down and deplete their inventory of land and houses they should start to throw off more cash. The management team is sound and has delivered a tripling of revenue over the last 6 years. I believe that the brothers own a significant percentage of the company but I don't have the numbers handy. Now consider the numbers:

Trailing P/E = 6.5
ROE = 29.2%
Analysts calling for a 12.1% revenue growth rate over the next 5 years

Seems like a no-brainer to me. My biggest fear actually is that they will take the company private at some paltry premium to the market.

Business Model = Except for a few very large sub-divisions, Uncle Bob likes to play where he can build to suit (communities = more than 50, less than 100) and has a competitive advantage. Staff reductions have been huge. Key for the future will be the restoration of capital for jumbos and land deals at $.30.