The Toro Company (NYSE:TTC), which is in the machinery business, and is based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$83.75 at one point, and dropping to the lows of US$60.05. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Toro’s current trading price of US$60.22 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Toro’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What’s the opportunity in Toro?
According to my valuation model, Toro seems to be fairly priced at around 16% below my intrinsic value, which means if you buy Toro today, you’d be paying a fair price for it. And if you believe that the stock is really worth $71.66, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, Toro has a low beta, which suggests its share price is less volatile than the wider market.
What kind of growth will Toro generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. With profit expected to grow by 58% over the next couple of years, the future seems bright for Toro. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? TTC’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on TTC, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Toro. You can find everything you need to know about Toro in the latest infographic research report. If you are no longer interested in Toro, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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