TOL: High End Resilience Remains Supportive

Research evidence excerpt

TOL: High End Resilience Remains Supportive

ant homerating.

price appreciation in the market over the last two years.

Upside scenario This would also help protect TOL from any potential land

impairments.In our upside scenario, we believe that TOL could be worth

$195 share, which is based on an upside case CY’26E TBV • We expect TOL to see solid community growth in CY'26

and beyond, though we expect the pace to normalizeof $97.37 and a 2.0x multiple, which implies TOL trades at

significantly from well above historical norms.13.7x our upside '26E EPS. In this scenario, we anticipate

that stronger-than-expected demand and pricing would drive Risks to rating and price targetupside to order and margin expectations, alongside greater

Downside risks to our price target and rating include: (1)share repurchases, resulting in greater improvement in ROTE

a slowdown in the housing market; (2) weaker demand andand multiple expansion.

pricing in high-end coastal CA and NYC markets; (3) delayed

Downside scenario closings from high-margin communities resulting in weaker-

than-expected gross margin trends; (4) reduced demand atIn our downside scenario, we believe that TOL would be worth

the high end of the market due to economic uncertainty; and$103/share, which is based on a downside ’26E TBV of $93.47,

(5) greater-than-expected land cost inflation.which includes a 10% TBV impairment, and the stock trading

at 1.1x TBV. This target implies 9.9x our downside ’26E EPS.

Our downside scenario assumes that volumes are lighter than

expected in tandem with sluggish pricing and rising costs for

land that pressures gross margin performance, resulting in

an earnings shortfall relative to expectations and multiple

contraction.

May 20, 2026 Mike Dahl (212) 618-3251; michael.dahl@rbccm.com 9