Toll Brothers (TOL) & PulteGroup (PHM) Financial Analysis
Toll Brothers (NYSE: TOL) and PulteGroup (NYSE:PHM) are both mid-cap construction companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, risk, analyst recommendations, earnings, dividends, profitability and institutional ownership.
This table compares Toll Brothers and PulteGroup’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Institutional & Insider Ownership
80.7% of Toll Brothers shares are owned by institutional investors. Comparatively, 85.8% of PulteGroup shares are owned by institutional investors. 8.8% of Toll Brothers shares are owned by insiders. Comparatively, 0.7% of PulteGroup shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
This is a breakdown of recent ratings for Toll Brothers and PulteGroup, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Toll Brothers currently has a consensus price target of $39.90, indicating a potential upside of 5.33%. PulteGroup has a consensus price target of $24.91, indicating a potential downside of 1.55%. Given Toll Brothers’ stronger consensus rating and higher possible upside, research analysts clearly believe Toll Brothers is more favorable than PulteGroup.
Risk & Volatility
Toll Brothers has a beta of 1.52, meaning that its share price is 52% more volatile than the S&P 500. Comparatively, PulteGroup has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500.
Toll Brothers pays an annual dividend of $0.32 per share and has a dividend yield of 0.8%. PulteGroup pays an annual dividend of $0.36 per share and has a dividend yield of 1.4%. Toll Brothers pays out 11.9% of its earnings in the form of a dividend. PulteGroup pays out 20.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Toll Brothers has raised its dividend for 3 consecutive years.
Earnings & Valuation
This table compares Toll Brothers and PulteGroup’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Toll Brothers||$5.64 billion||1.10||$534.25 million||$2.69||14.08|
|PulteGroup||$8.09 billion||0.94||$1.11 billion||$1.80||14.06|
PulteGroup has higher revenue and earnings than Toll Brothers. PulteGroup is trading at a lower price-to-earnings ratio than Toll Brothers, indicating that it is currently the more affordable of the two stocks.
Toll Brothers beats PulteGroup on 11 of the 17 factors compared between the two stocks.
About Toll Brothers
Toll Brothers, Inc. is engaged in designing, building, marketing, selling and arranging financing for detached and attached homes in luxury residential communities. The Company operates through two segments: Traditional Home Building and Toll Brothers City Living (City Living). Within the Traditional Home Building segment, it operates in five geographic segments in the United States: the North, consisting of Connecticut, Illinois, Massachusetts, Michigan, Minnesota, New Jersey and New York; the Mid-Atlantic, consisting of Delaware, Maryland, Pennsylvania and Virginia; the South, consisting of Florida, North Carolina and Texas; the West, consisting of Arizona, Colorado, Nevada and Washington, and California. City Living is the Company’s urban development division. Its products include Traditional Home Building Product and City Living Product. Its Traditional Home Building Product includes detached homes, move-up, executive, estate, and active-adult and age-qualified lines of home.
PulteGroup, Inc. is a homebuilder in the United States. The Company’s segments include Homebuilding and Financial Services. Its Homebuilding operations are engaged in the acquisition and development of land primarily for residential purposes within the United States and the construction of housing on such land. Its Financial Services operations consist principally of mortgage banking and title operations. The Company conducts its financial services business, through Pulte Mortgage LLC (Pulte Mortgage) and other subsidiaries. Pulte Mortgage arranges financing through the origination of mortgage loans. The Company’s subsidiaries are engaged in the homebuilding business. It offers a product line to meet the needs of homebuyers in its focused markets. Through its brands, which include Centex, Pulte Homes, Del Webb, DiVosta Homes, and John Wieland Homes and Neighborhoods, the Company offers a range of home designs, including single-family detached, townhouses, condominiums and duplexes.
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