2-Star Stocks Poised to Plunge: Toll Brothers?


Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, homebuilder Toll Brothers (NYS: TOL) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Toll Brothers and see what CAPS investors are saying about the stock right now.

Toll Brothers facts

Headquarters (founded)

Horsham, Pa. (1967)

Market Cap

$5.6 billion



Trailing-12-Month Revenue

$1.7 billion


CEO Douglas Yearley

CFO Martin Connor

Return on Equity (average, past 3 years)



$877.4 million / $2.0 billion


D.R. Horton (NYS: DHI)

Hovnanian Enterprises (NYS: HOV)

PulteGroup (NYS: PHM)

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 52% of the 1,370 members who have rated Toll Brothers believe the stock will underperform the S&P 500 going forward.

Just last week, one of those bears, AygHead, highlighted a key risk facing the company going forward:

[Toll Brothers] is invested in mid to high residences the northeast, outside of Manhattan. While housing is recovering strongly in the south and mid/west area, there is a structural shift from the northeast owing to expensive labor and high business taxes/expenses. There is a shortage of homes, but there is also a shortage on land (which means acquiring new land is $$$). While [Toll Brothers] is very well run, the macro [environment] in the northeast will keep a lid on pricing power and margins. Other homebuilders may fare better.

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The article 2-Star Stocks Poised to Plunge: Toll Brothers? originally appeared on Fool.com.

Fool contributor Brian Pacampara has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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