BTIG assumes coverage on Toll Bros. stock with Neutral rating

Investing.com - BTIG has assumed coverage on Toll Brothers (NYSE:TOL) with a Neutral rating, according to a research note released Monday. The luxury homebuilder currently trades at $139.88, with an upcoming earnings report scheduled for December 8.

The research firm cited Toll Brothers ’ targeted business improvements over recent years that have created a more efficient operation with resilient returns, while noting the company avoided a complete business overhaul. These improvements have translated into strong financial metrics, with InvestingPro data showing an impressive 18% return on equity and a healthy 26.3% gross profit margin.

BTIG highlighted that Toll Brothers has benefited from rebounds in its long-standing positions in the Mid-Atlantic and Northeast regions, which have become some of the most resilient homebuilding markets due to supply constraints, resulting in resilient gross margins and return on equity relative to peers. The company’s financial health is rated as "GREAT" by InvestingPro, with liquid assets exceeding short-term obligations and a comfortable current ratio of 4.24.

The stock has outperformed the iShares U.S. Home Construction ETF (ITB) in four of the past five years including year-to-date, and has gained 36% since 2023 compared to the ITB’s 2% increase. InvestingPro data confirms this strong momentum, showing a 34.7% price return over the past six months alone. Subscribers can access 10 additional ProTips and comprehensive financial metrics in the Pro Research Report available for Toll Brothers.

BTIG believes the benefits of business improvements have largely played out and are mostly incorporated into earnings, with limited room for further relative improvement in fiscal year 2026, concluding that at a 1.7x price-to-book multiple, investors fairly value the improved business model, resilient returns, and earnings outlook. According to InvestingPro analysis, Toll Brothers is currently slightly undervalued based on its Fair Value assessment, with analysts forecasting EPS of $14.24 for fiscal year 2025.

In other recent news, Toll Brothers, Inc. announced that its Board of Directors has approved a quarterly cash dividend of $0.25 per share. This dividend will be distributed on October 24, 2025, to shareholders who are on record as of October 10, 2025. This decision comes as part of the company’s ongoing financial management and shareholder return strategy. In related developments, Wedbush analysts reported that the Federal Reserve’s mortgage-backed securities holdings have decreased by 9% year-over-year. This reduction brings the Fed’s MBS portfolio down to $2.1 trillion, reflecting a continued effort in balance sheet reduction. These recent developments provide insights into the financial strategies and market conditions affecting Toll Brothers and broader economic indicators.

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