NYSE:TOL
Toll Brothers, Inc.
A premier manufacturer of luxury custom residential properties with strong cash flow generation and a dominant market presence in high-value geographic regions.
Key Metrics
Investment Thesis
Bull Case
Toll Brothers maintains a dominant market share in the luxury segment where competition is less intense than in mass-market housing. The company's ability to generate substantial operating cash flow provides flexibility for dividends, buybacks, and strategic acquisitions during market downturns. Strong brand equity allows for pricing resilience even when broader housing demand softens.
Bear Case
Recent revenue growth has stalled at $10.97B compared to the prior year, signaling potential saturation or slowing demand in luxury markets. The company faces persistent pressure from high interest rates that have historically cooled discretionary spending on custom homes. Significant accumulated other comprehensive income loss and a large retained earnings deficit suggest underlying equity quality concerns.
About Toll Brothers, Inc.
Toll Brothers Inc. is a leading designer and builder of luxury custom homes and condominiums across the United States, serving high-net-worth individuals in affluent markets including Florida, New York, and California. The company generates revenue primarily through home sales while managing significant capital expenditures for land acquisition and inventory development.
Analysis
Management Discussion
In 2025, the company reported revenue of $10.97B with net income declining slightly to $1.35B from $1.57B in 2024, reflecting a challenging macroeconomic environment. Cash flow from operations remained robust at $1.11B, though significant cash outflows for financing and investing activities indicate ongoing capital deployment for growth and debt management.
Industry Overview
The US residential construction industry is cyclical and heavily influenced by mortgage rates, consumer confidence, and inventory levels. Luxury home builders face unique challenges including higher land costs, stricter building codes, and a smaller total addressable market compared to affordable housing developers. Supply chain disruptions continue to impact material availability and project delivery schedules.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue | $9.99B | $10.85B | $10.97B |
| Cost of Revenue | $7.36B | $7.82B | $8.21B |
| Gross Profit | $2.63B | $3.02B | $2.75B |
| Operating Expenses | $909.4M | $982.3M | $1.03B |
| Operating Income | $1.72B | $2.04B | $1.72B |
| G&A | $909.4M | $982.3M | $1.03B |
| Stock-Based Comp | $24.8M | $29.6M | $30.8M |
| D&A | $76.5M | $81.2M | $82.1M |
| Depreciation | $75.5M | $80.9M | $82.1M |
| Other OpEx | $0 | $0 | $0 |
| Non-Operating Income | $117.6M | $45.5M | $70.8M |
| Pre-Tax Income | $1.84B | $2.09B | $1.79B |
| Income Tax | $470.3M | $514.4M | $444.9M |
| Continuing Ops | $1.37B | $1.57B | $1.35B |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $1.37B | $1.57B | $1.35B |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $1.37B | $1.57B | $1.35B |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Cash & Equivalents | $1.30B | $1.30B | $1.26B |
| PP&E (Net) | $324.0M | $453.0M | $273.4M |
| Operating Leases | $102.8M | $108.3M | $109.0M |
| Total Assets | $12.53B | $13.37B | $14.52B |
| Taxes Payable | $6.0M | $37.9M | $16.8M |
| Total Liabilities | $5.71B | $5.68B | $6.23B |
| Shareholders' Equity | $6.81B | $7.69B | $8.29B |
| Retained Earnings | $6.68B | $8.15B | $8.57B |
| AOCI | $40.9M | $31.3M | $22.3M |
| Treasury Stock | $619.1M | $1.21B | $1.01B |
| Total L&E | $12.53B | $13.37B | $14.52B |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Net Income (CFO) | $1.37B | $1.57B | $1.35B |
| Non-Cash Adjustments | $-178.5M | $-1.01B | $-774.3M |
| Working Capital Changes | $72.8M | $444.8M | $540.2M |
| Cash from Operations | $1.27B | $1.01B | $1.11B |
| Capital Expenditures | $73.0M | $73.6M | $86.2M |
| Cash from Investing | $-150.6M | $-167.6M | $-310.0M |
| Share Buybacks | $561.6M | $627.1M | $651.0M |
| Dividends Paid | $91.1M | $93.4M | $97.1M |
| Cash from Financing | $-1.17B | $-816.5M | $-833.9M |
| FX Effect | $0 | $0 | $0 |
| Net Change in Cash | $-54.2M | $26.1M | $-31.5M |
| Beginning Cash | $1.40B | $1.34B | $1.37B |
| Ending Cash | $1.34B | $1.37B | $1.34B |
Frequently Asked Questions
How does Toll Brothers, Inc. make money?
The company operates primarily through its Luxury Custom Homes segment, which accounts for the vast majority of revenue by selling bespoke residences. Additional streams include condominium sales and other real estate development activities that complement its core home building operations.
What are the main risks for TOL?
The luxury housing market is highly sensitive to interest rate fluctuations and economic downturns that could suppress demand for custom homes. Rising costs of raw materials such as lumber and steel can compress already thin margins if not effectively passed to consumers. Regulatory changes in zoning or environmental laws could impact land acquisition capabilities and project timelines.
What is TOL's competitive advantage?
Toll Brothers leverages a proprietary network of highly skilled craftsmen to deliver exceptional product quality that commands premium pricing power. The company benefits from a strong brand reputation in luxury markets and an established land portfolio in high-growth, affluent regions. Its efficient operating model allows for healthy gross margins despite rising material costs.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.