Last Update 01 May 26

TTC: Stronger 2026 Guidance And Execution Will Support Further Upside

Analysts have raised Toro's consensus price target to more closely match Baird's updated $105 view, reflecting refreshed models after Q1 results and guidance, while also acknowledging valuation concerns that led to a Market Perform stance from other research.

Analyst Commentary

Recent research highlights a mix of optimism and caution around Toro, with updates focused on how Q1 results, guidance, and valuation compare following a strong share move.

Bullish Takeaways

Bullish analysts raised price targets toward US$105 after updating models for Q1 results and guidance, indicating confidence that execution and outlook support current assumptions.
Stronger guidance has given these analysts more comfort in their revenue and earnings frameworks, which they see as aligned with the refreshed valuation targets.
The alignment of consensus targets closer to the higher end of recent views suggests that, for bullish analysts, current fundamentals support a narrower band of expected outcomes.
Model updates following Q1 indicate that analysts view company-level execution as sufficient to support their neutral to constructive stance, even without calling for aggressive upside.

Bearish Takeaways

Bearish analysts highlight valuation as a key concern after a share move of over 40% since early December, which they see as limiting the margin of safety at current levels.
They note that Toro’s valuation has returned to its 10-year median of about 14x forward EBITDA, suggesting the stock is no longer obviously inexpensive on historical multiples.
With an expected forward free cash flow yield of about 5%, more cautious analysts view the risk reward profile as balanced rather than compelling, particularly after the recent rally.
These analysts also point out that expectations for 2026 are framed as a relatively typical year with single digit earnings growth, as backlogs ease, channel inventories normalize, and homeowner activity remains muted. In their view, this can limit the potential for a re-rating driven primarily by growth.

What’s in the News

The Toro Company held its 2026 Annual Meeting of Stockholders on March 17, 2026. At the meeting, shareholders approved an amendment to the Restated Certificate of Incorporation to eliminate or limit officer liability under Delaware law and to change the par value of all capital stock from $1.00 to $0.01 per share (Key Developments).
The company raised earnings guidance for fiscal 2026. Management now expects total company net sales growth in the range of 3% to 6.5%, compared with a prior range of 2% to 5% (Key Developments).
From November 1, 2025 to January 30, 2026, Toro repurchased 739,862 shares, representing 0.76% of shares, for US$63.94 million, completing the buyback announced on December 11, 2024 (Key Developments).
From November 1, 2025 to January 2, 2026, Toro repurchased 391,790 shares, representing 0.4% of shares, for US$30.94 million. This completed the repurchase of 5,000,000 shares, or 4.97%, for US$390.42 million under the buyback announced on December 13, 2022 (Key Developments).

Valuation Changes

Fair Value: stays at $110.50, with no change in the modelled estimate.
Discount Rate: has risen slightly from 8.61% to 8.63%, reflecting a modest adjustment to the required return used in the analysis.
Revenue Growth: remains effectively unchanged at about 3.67% in the long term model.
Net Profit Margin: is essentially flat at about 10.42%, indicating no material shift in profitability assumptions.
Future P/E: edges up slightly from 24.38x to 24.39x, implying a very small change in the valuation multiple applied to forward earnings.

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Key Takeaways

Strategic investment in automation, electrification, and productivity initiatives positions Toro for long-term premium growth, margin expansion, and improved profitability across core segments.
Stabilized professional and recovering residential demand, alongside focus on sustainability and operational streamlining, underpin robust future revenue and earnings potential.
Toro faces ongoing margin and earnings risks from weak residential demand, weather and macro volatility, cost pressures, rising competition, and limited international diversification.

Catalysts

About Toro

Designs, manufactures, markets, and sells professional turf maintenance equipment and services.What are the underlying business or industry changes driving this perspective?

Ongoing investments and recent product launches in smart, connected, and autonomous turf and irrigation solutions (e.g., GeoLink Mow Autonomous Fairway Mower, TurfRad moisture sensing) directly position Toro to benefit from increasing automation in landscaping and heightened focus on water conservation, supporting future premium product revenue growth and higher net margins.
Professional segment momentum, driven by record golf participation and sustained infrastructure investment cycles, is providing multi-year order visibility and stable demand for advanced turf, grounds, and underground construction products, setting up for rising revenues and sustained earnings growth as markets recover.
Acceleration of the AMP productivity program, with $75 million in run-rate cost savings and a longer-term target of $100 million+, is enhancing operating leverage and margins, while ongoing portfolio optimization and selective divestitures streamline core operations for improved future profitability.
Channel inventory normalization and right-sizing in the residential segment, combined with maintained market share at key retailers, position Toro for a recovery in residential revenue and segment margins approaching historic 8–10% levels once consumer sentiment improves.
Regulatory and customer shifts toward electrification and sustainability are catalyzing further adoption of Toro's battery-powered and electric equipment lines, leveraging R&D investments to capture market share and drive high-margin growth as emission standards tighten across the industry.

Toro Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Toro's revenue will grow by 3.7% annually over the next 3 years.
Analysts assume that profit margins will increase from 7.3% today to 10.4% in 3 years time.
Analysts expect earnings to reach $528.4 million (and earnings per share of $5.56) by about May 2029, up from $331.2 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 24.6x on those 2029 earnings, down from 27.9x today. This future PE is lower than the current PE for the US Machinery industry at 27.8x.
Analysts expect the number of shares outstanding to decline by 1.78% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.63%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

Persistently weak demand in the residential segment, driven by homeowner caution on big-ticket purchases, prolonged low consumer confidence, and dealer hesitancy to restock, creates an ongoing drag on residential revenues and erodes residential margins, as reflected in significant year-over-year declines and the Spartan impairment charge.
Heavy exposure to macroeconomic cycles and weather volatility, particularly with two consecutive years of low snowfall affecting both residential and BOSS business segments, increases unpredictability in revenue and inventory management, with potential negative impacts on future earnings if weather patterns or housing weakness persist.
Elevated input costs (materials, manufacturing) and ongoing tariffs (especially on steel and China-sourced products) threaten net margins; despite current productivity and pricing mitigation strategies, future margin improvement could stall or reverse if inflation or new tariffs escalate.
Rising competition and technological disruption in landscaping equipment (e.g., electrification, automation, smart connected products) requires continuous heavy R&D and capital investment; if competitors innovate more rapidly or Toro's adoption lags, it could result in long-term market share loss and muted earnings growth.
Continued geographic concentration in North America and limited progress on expanding international professional/municipal markets leaves Toro vulnerable to regional economic slowdowns, shifts in infrastructure investment cycles, or changing regulatory/emissions standards, risking revenue concentration and increased earnings volatility.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $110.5 for Toro based on their expectations of its future earnings growth, profit margins and other risk factors.
In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be $5.1 billion, earnings will come to $528.4 million, and it would be trading on a PE ratio of 24.6x, assuming you use a discount rate of 8.6%.
Given the current share price of $95.17, the analyst price target of $110.5 is 13.9% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Ongoing Investments Will Drive Automation And Water Conservation In Landscaping