Critical Survey: Brookfield Residential Properties (BRP) and Toll Brothers (TOL)

Toll Brothers (NYSE: TOL) and Brookfield Residential Properties (NYSE:BRP) are both construction companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, dividends, valuation, institutional ownership, profitability, risk and analyst recommendations.

Insider and Institutional Ownership

80.3% of Toll Brothers shares are owned by institutional investors. 8.8% of Toll Brothers shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations and price targets for Toll Brothers and Brookfield Residential Properties, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Toll Brothers 1 6 8 0 2.47
Brookfield Residential Properties 0 0 3 0 3.00

Toll Brothers presently has a consensus target price of $39.27, suggesting a potential upside of 2.94%. Brookfield Residential Properties has a consensus target price of $29.00, suggesting a potential upside of 20.83%. Given Brookfield Residential Properties’ stronger consensus rating and higher probable upside, analysts plainly believe Brookfield Residential Properties is more favorable than Toll Brothers.

Profitability

This table compares Toll Brothers and Brookfield Residential Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Toll Brothers 7.67% 9.71% 4.33%
Brookfield Residential Properties 12.74% 18.70% 8.12%

Earnings and Valuation

This table compares Toll Brothers and Brookfield Residential Properties’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Toll Brothers $5.41 billion 1.15 $507.09 million $2.43 15.70
Brookfield Residential Properties N/A N/A N/A N/A N/A

Toll Brothers has higher revenue and earnings than Brookfield Residential Properties.

Dividends

Toll Brothers pays an annual dividend of $0.32 per share and has a dividend yield of 0.8%. Brookfield Residential Properties does not pay a dividend. Toll Brothers pays out 13.2% of its earnings in the form of a dividend.

Summary

Brookfield Residential Properties beats Toll Brothers on 6 of the 11 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.

About Brookfield Residential Properties

Brookfield Residential Properties Inc. is a land developer and homebuilder with operations in Canada and the United States. The Company develops land to create master-planned communities and build and sell lots to third-party builders, as well as to its own homebuilding division. It also participates in real estate opportunities, including infill projects, mixed-use developments, infrastructure projects and joint ventures. It operates through three segments within North America: Canada, California and Central and Eastern United States. Its Canadian operations are in the Alberta and Ontario markets; California operations include Northern California (San Francisco Bay Area and Sacramento) and Southern California (Los Angeles/Southland and San Diego/Riverside), and Central and Eastern United States operations include Washington, D.C. Area, Colorado, Texas and Arizona. It is focused on land development and single family and multi-family homebuilding in the markets in which it operates.

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