Toll Brothers 25% 3-Month Rally Hits 385th Trading Volume Rank as Record $2.94B Revenue Drives Bargain Valuation

Toll Brothers (TOL) rose 0.11% on August 21, 2025, with a trading volume of $230 million, representing a 51.01% decline from the previous day and ranking 385th in market activity. The stock has surged over 25% in the past three months despite trading 23% below its 52-week high.

The company reported record third-quarter revenue of $2.94 billion, surpassing estimates, driven by its luxury home segment with an average sales price of $974,000. Despite a 19% annual decline in backlog units to 5,492 homes, TOL maintained an adjusted gross margin of 27.5% and returned $226 million to shareholders through dividends and buybacks. Full-year delivery guidance was set at 11,200 homes, reflecting a cautious outlook amid softer housing demand.

Toll Brothers’ valuation remains attractive, trading at 9.4X forward earnings compared to the industry average of 12.4X. The stock’s 9.4X multiple and 2X sales ratio position it as a discount relative to peers. A 7% payout ratio and five consecutive years of dividend growth highlight its capital return strategy, though its 0.76% yield remains below the S&P 500 average.

The strategy of purchasing the top 500 stocks by daily trading volume and holding them for one day from 2022 to the present has yielded moderate returns. The 1-day return was 1.98%, with a total return of 7.61% over 365 days. The strategy's Sharpe ratio was 0.94, indicating good risk-adjusted returns. However, the maximum drawdown of -29.16% highlights its vulnerability during market downturns.