Toll Brothers sets $500 million notes offering at 5.6%

FORT WASHINGTON, Pa. - Toll Brothers, Inc. (NYSE: TOL), a prominent luxury homebuilder with a market capitalization of $10.68 billion, has priced a substantial underwritten public offering of Senior Notes. The company, known for serving a variety of home buyers across the United States, announced the pricing of $500 million of 5.600% Senior Notes due 2035. These notes are to be issued by Toll Brothers Finance Corp., a fully-owned subsidiary of Toll Brothers. According to InvestingPro analysis, the company maintains a moderate debt level with a total debt-to-capital ratio of 0.22, suggesting prudent financial management.

The settlement of the Notes is expected on June 10, 2025, with customary closing conditions. The semi-annual interest payments for the Notes will commence on December 15, 2025. The proceeds from the offering are intended for general corporate purposes, which may include repaying the company’s 4.875% Senior Notes due later this year. The company’s strong financial position is reflected in its current ratio of 4.17, indicating robust liquidity to meet short-term obligations. InvestingPro’s Fair Value analysis suggests the stock is currently undervalued.

The offering has attracted a consortium of financial institutions to manage the book-running process, including BofA Securities, Inc., BBVA Securities, Inc., and Goldman Sachs & Co. LLC, among others. Additional firms, such as Citizens JPM Securities, LLC and Regions Securities LLC, will act as Lead Managers, with several others serving as Co-Managers.

This financial move is part of a broader strategy outlined in an effective shelf registration statement previously filed with the Securities and Exchange Commission (SEC). Interested parties can obtain documents related to the offering via the SEC’s website or directly from the underwriters. With a P/E ratio of 7.97 and an overall Financial Health Score rated as GREAT by InvestingPro, which offers comprehensive analysis and additional insights through its Pro Research Report covering 1,400+ US equities, Toll Brothers demonstrates strong fundamental performance.

The announcement comes as part of Toll Brothers’ ongoing operations, which span over 60 markets in 24 states and the District of Columbia. The company’s business activities, including this offering, are subject to various market conditions and risks, which they disclose in their public filings. With a gross profit margin of 26.73% and return on equity of 18%, the company maintains strong operational efficiency despite market challenges.

Investors and industry watchers will note that the offering is made in the context of the company’s broader financial strategies and market activities. This news is based on a press release statement from Toll Brothers, Inc. and does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein.

In other recent news, Toll Brothers Inc. has been the focus of several key developments. S&P Global Ratings upgraded the company’s credit rating to ’BBB’ from ’BBB-’, highlighting Toll Brothers’ solid credit metrics and consistent debt management. The agency projects a 3.5% increase in revenue to $11.2 billion by 2025, though it expects EBITDA to decline by about 7% to $2.2 billion. Meanwhile, JPMorgan adjusted its price target for Toll Brothers to $139, maintaining a Neutral rating, following the company’s second-quarter performance that exceeded expectations in home closings and gross margins.

Keefe, Bruyette & Woods also revised their outlook, cutting the price target to $120 but retaining a Market Perform rating, citing softer market conditions and lower-than-expected orders. Conversely, RBC Capital Markets maintained an Outperform rating with a $133 target, praising the company’s resilience and strategic market positioning. Evercore ISI raised its price target to $169, maintaining an Outperform rating, after Toll Brothers reported robust second-quarter earnings that surpassed projections.

The company’s strategic focus on pricing over volume and its commitment to share repurchases were noted positively. Despite challenges in new orders and average selling prices, Toll Brothers reaffirmed its full-year guidance and emphasized its strong financial strategy. These developments underscore the varied assessments from analysts, reflecting the complexities of the current housing market conditions.

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