Lennar vs Toll Brothers Which Is a Smarter Choice?

Lennar Corporation and Toll Brothers Inc. are two of the largest and most well-known companies in the homebuilding industry. Lennar, based in Miami, Florida, focuses on constructing single-family homes, townhomes, and condominiums across the United States. Toll Brothers, headquartered in Horsham, Pennsylvania, specializes in luxury homes and developments in affluent markets. Investors often compare the performance of Lennar and Toll Brothers stocks to gauge the health of the housing market and make informed investment decisions.

Lennar or Toll Brothers?

When comparing Lennar and Toll Brothers, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Lennar and Toll Brothers.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Lennar has a dividend yield of 1.24%, while Toll Brothers has a dividend yield of 0.62%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Lennar reports a 5-year dividend growth of 56.46% year and a payout ratio of 12.37%. On the other hand, Toll Brothers reports a 5-year dividend growth of 15.15% year and a payout ratio of 5.88%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Lennar P/E ratio at 10.41 and Toll Brothers's P/E ratio at 9.43. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Lennar P/B ratio is 1.59 while Toll Brothers's P/B ratio is 1.93.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Lennar has seen a 5-year revenue growth of 0.81%, while Toll Brothers's is 0.93%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Lennar's ROE at 15.62% and Toll Brothers's ROE at 21.37%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $160.03 for Lennar and $145.24 for Toll Brothers. Over the past year, Lennar's prices ranged from $139.10 to $193.80, with a yearly change of 39.32%. Toll Brothers's prices fluctuated between $91.92 and $169.52, with a yearly change of 84.42%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.