Toro (NYSE:TTC) - Share price, News & Analysis

Q: What is the Fair Price of TTC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

TTC ($76.87) is trading below our estimate of [[fair value]] ($143.53)

TTC fundamental analysis
Snowflake Score
Valuation	2/6
Future Growth	2/6
Past Performance	3/6
Financial Health	4/6
Dividends	3/6

TTC Stock Overview

The Toro Company engages in the designing, manufacturing, marketing, and selling professional and residential equipment worldwide.

Rewards

Trading at 46.4% below our estimate of its fair value

Earnings are forecast to grow 13.48% per year

Risk Analysis

Has a high level of debt

Toro Competitors

AGCO

NYSE:AGCO

US$7.6b

CNH Industrial

NYSE:CNHI

US$16.5b

Lindsay

NYSE:LNN

US$1.4b

Titan International

NYSE:TWI

US$1.0b

Price History & Performance

Summary of all time highs, changes and price drops for Toro
Historical stock prices
Current Share Price	US$76.87
52 Week High	US$115.68
52 Week Low	US$71.86
Beta	0.73
1 Month Change	-7.01%
3 Month Change	-11.00%
1 Year Change	-29.63%
3 Year Change	17.16%
5 Year Change	10.30%
Change since IPO	4,819.68%

Recent News & Updates

Jun 27

The Toro Company Looks Attractive At The Current Levels

In the near term, the company's revenue growth is expected to be driven by a strong backlog order and higher price realization. While the cost headwinds are expected to continue, margins should improve sequentially in 2H FY22 vs. 1H FY22, and longer-term margin prospects also look good. Valuations are attractive.

Jun 06

Toro: The Bottom Is In

Toro's sales growth is exceeding expectations and margins continue to recover. The raised EPS guidance of $4.00 to $4.15 still looks conservative when modeling the income statement based on management comments. At around 20 times forward earnings, Toro stock has rarely been this cheap in the last 6 years.

Shareholder Returns

	TTC	US Machinery	US Market
7D	4.1%	1.8%	6.3%
1Y	-29.6%	-19.8%	-18.8%

Return vs Industry: TTC underperformed the US Machinery industry which returned -19.8% over the past year.

Return vs Market: TTC underperformed the US Market which returned -18.8% over the past year.

Price Volatility

Is TTC's price volatile compared to industry and market?
TTC volatility
TTC Average Weekly Movement	4.9%
Machinery Industry Average Movement	6.0%
Market Average Movement	8.1%
10% most volatile stocks in US Market	16.7%
10% least volatile stocks in US Market	3.2%

Stable Share Price: TTC is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: TTC's weekly volatility (5%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1914	10,982	Rick Olson	https://www.thetorocompany.com

The Toro Company engages in the designing, manufacturing, marketing, and selling professional and residential equipment worldwide. The company’s Professional segment offers turf and landscape equipment products, including sports fields and grounds mowing and maintenance equipment, golf course mowing and maintenance equipment, landscape contractor mowing equipment, landscape creation and renovation equipment, and other maintenance equipment; rental, specialty, and underground construction equipment; and snow and ice management equipment, such as snowplows, brush, snow thrower attachment, 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 and lighting products that consist of sprinkler heads, electric and hydraulic valves, controllers, computer irrigation central control systems, coupling systems, and ag-irrigation drip tape and hose products, as well as professionally installed landscape lighting products offered through distributors and landscape contractors.

Toro Fundamentals Summary

How do Toro's earnings and revenue compare to its market cap?
TTC fundamental statistics
Market Cap	US$8.22b
Earnings (TTM)	US$357.06m
Revenue (TTM)	US$4.12b

22.5x

P/E Ratio

2.0x

P/S Ratio

Is TTC overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
TTC income statement (TTM)
Revenue	US$4.12b
Cost of Revenue	US$2.79b
Gross Profit	US$1.33b
Other Expenses	US$970.31m
Earnings	US$357.06m

Last Reported Earnings

Apr 29, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	3.41
Gross Margin	32.22%
Net Profit Margin	8.67%
Debt/Equity Ratio	89.2%

How did TTC perform over the long term?

See historical performance and comparison

Dividends

1.6%

Current Dividend Yield

33%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is TTC undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for TTC?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for TTC. This is calculated by dividing TTC's market cap by their current preferred multiple.
What is TTC's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$8.22b

TTC key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	2.2x
Enterprise Value/EBITDA	16x
PEG Ratio	1.7x

Price to Earnings Ratio vs Peers

How does TTC's PE Ratio compare to its peers?

TTC PE Ratio vs Peers

The above table shows the PE ratio for TTC vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	16x
AGCO AGCO	8.5x	7.8%	US$7.6b
CNHI CNH Industrial	9.6x	2.1%	US$16.5b
LNN Lindsay	29.1x	22.1%	US$1.4b
TWI Titan International	16.8x	37.1%	US$1.0b
TTC Toro	22.5x	13.5%	US$8.2b

Forward PE

Price-To-Earnings vs Peers: TTC is expensive based on its Price-To-Earnings Ratio (22.5x) compared to the peer average (16x).

Price to Earnings Ratio vs Industry

How does TTC's PE Ratio compare vs other companies in the US Machinery Industry?

Price-To-Earnings vs Industry: TTC is expensive based on its Price-To-Earnings Ratio (22.5x) compared to the US Machinery industry average (21.5x)

Price to Earnings Ratio vs Fair Ratio

What is TTC's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

TTC PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	22.5x
Fair PE Ratio	21.1x

Price-To-Earnings vs Fair Ratio: TTC is expensive based on its Price-To-Earnings Ratio (22.5x) compared to the estimated Fair Price-To-Earnings Ratio (21.1x).

Share Price vs Fair Value

What is the Fair Price of TTC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: TTC ($76.87) is trading below our estimate of fair value ($143.53)

Significantly Below Fair Value: TTC is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: TTC is poor value based on its PEG Ratio (1.7x)

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Future Growth

How is Toro forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

13.5%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: TTC's forecast earnings growth (13.5% per year) is above the savings rate (1.9%).

Earnings vs Market: TTC's earnings (13.5% per year) are forecast to grow slower than the US market (13.8% per year).

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

Revenue vs Market: TTC's revenue (8.2% per year) is forecast to grow slower than the US market (8.3% per year).

High Growth Revenue: TTC's revenue (8.2% 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 (30.9%)

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Past Performance

How has Toro performed over the past 5 years?

Past Performance Score

3/6

Past Performance Score 3/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

10.1%

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 (11.2%).

Past Earnings Growth Analysis

Earnings Trend: TTC's earnings have grown by 10.1% per year over the past 5 years.

Accelerating Growth: TTC's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: TTC had negative earnings growth (-13.8%) over the past year, making it difficult to compare to the Machinery industry average (24%).

Return on Equity

High ROE: TTC's Return on Equity (29.2%) is considered high.

Discover strong past performing companies

Financial Health

How is Toro's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: TTC's short term assets ($1.7B) exceed its short term liabilities ($1.1B).

Long Term Liabilities: TTC's short term assets ($1.7B) exceed its long term liabilities ($1.1B).

Debt to Equity History and Analysis

Debt Level: TTC's net debt to equity ratio (67.7%) is considered high.

Reducing Debt: TTC's debt to equity ratio has increased from 55.8% to 89.2% over the past 5 years.

Debt Coverage: TTC's debt is well covered by operating cash flow (25.6%).

Interest Coverage: TTC's interest payments on its debt are well covered by EBIT (16.1x coverage).

Balance Sheet

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Dividend

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

Dividend Score

3/6

Dividend Score 3/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

1.56%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: TTC's dividend (1.56%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.57%).

High Dividend: TTC's dividend (1.56%) is low compared to the top 25% of dividend payers in the US market (4.25%).

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.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (33.4%), TTC's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its high cash payout ratio (90.4%), TTC's dividend payments are not well covered by cash flows.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

7.2yrs

Average management tenure

CEO

Rick Olson (57 yo)

6.75yrs

Tenure

US$8,629,851

Compensation

Mr. Richard M. Olson, also known as Rick, serves as Director at Donaldson Company, Inc since January 27, 2022. He has been the Chief Executive Officer of The Toro Company since November 1, 2016 and has bee...

CEO Compensation Analysis

Compensation vs Market: Rick's total compensation ($USD8.63M) is about average for companies of similar size in the US market ($USD8.23M).

Compensation vs Earnings: Rick's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.

Leadership Team

Experienced Management: TTC's management team is seasoned and experienced (7.2 years average tenure).

Board Members

Experienced Board: TTC's board of directors are considered experienced (6.3 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

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

Ownership Breakdown

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

Data	Last Updated (UTC time)
Company Analysis	2022/06/28 00:00
End of Day Share Price	2022/06/28 00:00
Earnings	2022/04/29
Annual Earnings	2021/10/31