NYSE:TTC

Stock Analysis Report

Executive Summary

The Toro Company designs, manufactures, and markets professional and residential equipment worldwide.

Rewards

Earnings are forecast to grow 12.48% per year

Earnings have grown 9.9% per year over the past 5 years

Pays a reliable dividend of 1.2%

Risk Analysis

Has a high level of debt



Snowflake Analysis

Excellent balance sheet average dividend payer.


Similar Companies

Share Price & News

How has Toro's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: TTC has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-1.1%

TTC

-1.7%

US Machinery

-0.09%

US Market


1 Year Return

38.8%

TTC

20.1%

US Machinery

23.9%

US Market

Return vs Industry: TTC exceeded the US Machinery industry which returned 22.4% over the past year.

Return vs Market: TTC exceeded the US Market which returned 24.7% over the past year.


Shareholder returns

TTCIndustryMarket
7 Day-1.1%-1.7%-0.09%
30 Day5.2%-0.9%3.1%
90 Day12.5%5.0%10.4%
1 Year40.6%38.8%22.4%20.1%26.6%23.9%
3 Year44.5%39.1%39.3%30.3%50.9%41.2%
5 Year169.5%152.4%77.6%56.2%78.1%58.5%

Price Volatility Vs. Market

How volatile is Toro's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Toro undervalued compared to its fair value and its price relative to the market?

32.28x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: TTC ($83.11) is trading above our estimate of fair value ($53.1)

Significantly Below Fair Value: TTC is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: TTC is poor value based on its PE Ratio (32.4x) compared to the Machinery industry average (23.4x).

PE vs Market: TTC is poor value based on its PE Ratio (32.4x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: TTC is poor value based on its PEG Ratio (2.6x)


Price to Book Ratio

PB vs Industry: TTC is overvalued based on its PB Ratio (10.3x) compared to the US Machinery industry average (2.5x).


Next Steps

Future Growth

How is Toro forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

12.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: TTC's forecast earnings growth (12.5% per year) is above the savings rate (1.7%).

Earnings vs Market: TTC's earnings (12.5% per year) are forecast to grow slower than the US market (14.3% per year).

High Growth Earnings: TTC's earnings are forecast to grow, but not significantly.

Revenue vs Market: TTC's revenue (6.2% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: TTC's revenue (6.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: TTC's Return on Equity is forecast to be high in 3 years time (35.9%)


Next Steps

Past Performance

How has Toro performed over the past 5 years?

9.9%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: TTC has high quality earnings.

Growing Profit Margin: TTC's current net profit margins (8.7%) are lower than last year (10.4%).


Past Earnings Growth Analysis

Earnings Trend: TTC's earnings have grown by 9.9% per year over the past 5 years.

Accelerating Growth: TTC's earnings growth over the past year (0.8%) is below its 5-year average (9.9% per year).

Earnings vs Industry: TTC earnings growth over the past year (0.8%) underperformed the Machinery industry 9.6%.


Return on Equity

High ROE: TTC's Return on Equity (31.9%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Toro's financial position?


Financial Position Analysis

Short Term Liabilities: TTC's short term assets ($1.1B) exceed its short term liabilities ($757.0M).

Long Term Liabilities: TTC's short term assets ($1.1B) exceed its long term liabilities ($714.0M).


Debt to Equity History and Analysis

Debt Level: TTC's debt to equity ratio (81.5%) is considered high.

Reducing Debt: TTC's debt to equity ratio has reduced from 91.8% to 81.5% over the past 5 years.

Debt Coverage: TTC's debt is well covered by operating cash flow (48.1%).

Interest Coverage: TTC's interest payments on its debt are well covered by EBIT (15.2x coverage).


Balance Sheet

Inventory Level: TTC has a high level of physical assets or inventory.

Debt Coverage by Assets: TTC's debt is covered by short term assets (assets are 1.6x debt).


Next Steps

Dividend

What is Toro's current dividend yield, its reliability and sustainability?

1.21%

Current Dividend Yield


Dividend Yield vs Market

company1.2%marketbottom25%1.4%markettop25%3.7%industryaverage1.9%forecastin3Years1.2%

Current dividend yield vs market & industry

Notable Dividend: TTC's dividend (1.2%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: TTC's dividend (1.2%) is low compared to the top 25% of dividend payers in the US market (3.66%).


Stability and Growth of Payments

Stable Dividend: TTC's dividends per share have been stable in the past 10 years.

Growing Dividend: TTC's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (35.1%), TTC's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: TTC's dividends in 3 years are forecast to be well covered by earnings (24.7% payout ratio).


Next Steps

Management

What is the CEO of Toro's salary, the management and board of directors tenure and is there insider trading?

5.7yrs

Average management tenure


CEO

Rick Olson (55yo)

3.2yrs

Tenure

US$5,073,126

Compensation

Mr. Richard M. Olson, also known as Rick, has been the Chief Executive Officer of The Toro Company November 1, 2016 and as its President since September 1, 2015. Mr. Olson has been the Chairman of The Toro ...


CEO Compensation Analysis

Compensation vs Market: Rick's total compensation ($USD5.07M) is about average for companies of similar size in the US market ($USD6.46M).

Compensation vs Earnings: Rick's compensation has been consistent with company performance over the past year.


Management Age and Tenure

5.7yrs

Average Tenure

54yo

Average Age

Experienced Management: TTC's management team is seasoned and experienced (5.7 years average tenure).


Board Age and Tenure

5.6yrs

Average Tenure

59.5yo

Average Age

Experienced Board: TTC's board of directors are considered experienced (5.6 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

SellUS$132,58027 Mar 19
Janet Katherine Cooper
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares1,941
Max PriceUS$68.31
SellUS$135,89020 Mar 19
Robert Buhrmaster
EntityIndividual
Shares2,000
Max PriceUS$67.95
SellUS$605,46214 Mar 19
Robert Buhrmaster
EntityIndividual
Shares9,000
Max PriceUS$67.43

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Tom Swain (66yo)

    Managing Director of Distributor Development

    • Tenure: 4.8yrs
  • Blake Grams (52yo)

    Vice President of Global Operations

    • Tenure: 6.6yrs
  • Kurt Svendsen (53yo)

    Vice President of Information Services

    • Tenure: 6.6yrs
  • Renee Peterson (57yo)

    VP, Treasurer & CFO

    • Tenure: 8.4yrs
    • Compensation: US$1.87m
  • Rick Olson (55yo)

    Chairman

    • Tenure: 3.2yrs
    • Compensation: US$5.07m
  • Amy Dahl (45yo)

    General Counsel

    • Heather Hille

      Director of Investor Relations & External Communications

      • Tenure: 4.7yrs
    • Julie Kerekes

      Managing Director of Tax & Treasury

      • Nick Rhoads

        Director of Business Development & Strategic Planning


        Board Members

        • Gregg Steinhafel (64yo)

          Independent Director

          • Tenure: 21yrs
          • Compensation: US$220.31k
        • Jeffrey Ettinger (61yo)

          Independent Director

          • Tenure: 9.5yrs
          • Compensation: US$206.84k
        • Janet Katherine Cooper (65yo)

          Independent Director

          • Tenure: 26yrs
          • Compensation: US$234.14k
        • Kathy Harless (68yo)

          Independent Director

          • Tenure: 20yrs
          • Compensation: US$217.56k
        • Chris Koch (54yo)

          Independent Director

          • Tenure: 3.8yrs
          • Compensation: US$212.90k
        • Gary Ellis (61yo)

          Lead Director

          • Tenure: 0.8yrs
          • Compensation: US$224.73k
        • Jeff Harmening (52yo)

          Independent Director

          • Tenure: 0.8yrs
        • Joc O’Rourke (58yo)

          Independent Director

          • Tenure: 7.4yrs
          • Compensation: US$210.66k
        • Mike Vale (53yo)

          Independent Director

          • Tenure: 2yrs
          • Compensation: US$82.17k
        • Rick Olson (55yo)

          Chairman

          • Tenure: 3.2yrs
          • Compensation: US$5.07m

        Company Information

        The Toro Company's company bio, employee growth, exchange listings and data sources


        Key Information

        • Name: The Toro Company
        • Ticker: TTC
        • Exchange: NYSE
        • Founded: 1914
        • Industry: Agricultural and Farm Machinery
        • Sector: Capital Goods
        • Market Cap: US$8.830b
        • Shares outstanding: 106.60m
        • Website: https://www.thetorocompany.com

        Number of Employees


        Location

        • The Toro Company
        • 8111 Lyndale Avenue South
        • Bloomington
        • Minnesota
        • 55420
        • United States

        Listings

        TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
        TTCNYSE (New York Stock Exchange)YesCommon StockUSUSDSep 1978
        TO2DB (Deutsche Boerse AG)YesCommon StockDEEURSep 1978

        Biography

        The Toro Company designs, manufactures, and markets professional and residential equipment worldwide. The company’s Professional segment offers turf and landscape equipment products, including sports fields and grounds maintenance equipment, golf course mowing and maintenance equipment, landscape contractor mowing equipment, landscape creation and renovation equipment, rental and specialty construction equipment, and other maintenance equipment; and snow and ice management equipment, such as snowplows, salt and sand spreaders, and related parts and accessories for light and medium duty trucks, utility task vehicles, skid steers, and front-end loaders. It also provides irrigation products comprising sprinkler heads, electric and hydraulic valves, controllers, computer irrigation central control systems, coupling systems, and agricultural irrigation system drip tape and hose products, as well as professionally installed lighting products through distributors and landscape contractors. This segment sells its products primarily through a network of distributors and dealers to professional users engaged in maintaining golf courses, sports fields, municipal properties, agricultural fields, residential and commercial landscapes, and removing snow and ice, as well as directly to government customers, rental companies, and retailers. Its Residential segment provides walk power mowers, riding mowers, snow throwers, replacement parts, and home solution products that include trimmers, blowers, blower-vacuums, and underground and hose-end retail irrigation products. This segment sells its products to homeowners through a network of distributors and dealers; and various home centers, hardware retailers, and mass retailers, as well as online. The Toro Company was founded in 1914 and is headquartered in Bloomington, Minnesota. 


        Company Analysis and Financial Data Status

        All financial data provided by Standard & Poor's Capital IQ.
        DataLast Updated (UTC time)
        Company Analysis2020/01/23 23:55
        End of Day Share Price2020/01/23 00:00
        Earnings2019/10/31
        Annual Earnings2019/10/31


        Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.