The Toro Company (TTC) AI Stock Analysis

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The Toro Company

(NYSE:TTC)

76Outperform

The Toro Company scores well due to strong financial health, stable profitability, and strategic initiatives like the AMP program. Despite technical bearishness and challenges in the Residential segment, the company maintains a balanced valuation and sound future guidance. Continued monitoring of revenue trends and cost pressures is essential.

Positive Factors

Product Demand

Autonomy and labor-saving products expected to thrive, with most courses going autonomous with mowers if labor is not available.

Technology

TTC appears well positioned for upcoming battery/autonomous technology shifts.

Valuation

Valuation nearing a 5-year low, suggesting value players might find it attractive at current levels.

Negative Factors

Backlog

Backlog conversion/possible air pocket still remains a concern.

Inventory

Extra inventory and challenging consumer leading to expectations for flat year.

The Toro Company (TTC) vs. S&P 500 (SPY)

Market Cap

$6.79B

Dividend Yield2.17%

Average Volume (3M)1.01M

Price to Earnings (P/E)17.3

Beta (1Y)1.13

Revenue Growth4.02%

EPS Growth42.77%

CountryUS

Employees11,108

SectorIndustrials

Sector Strength74

IndustryManufacturing - Tools & Accessories

Share Statistics

EPS (TTM)3.92

Shares Outstanding99,820,060

10 Day Avg. Volume774,917

30 Day Avg. Volume1,010,975

Financial Highlights & Ratios

PEG Ratio0.41

Price to Book (P/B)N/A

Price to Sales (P/S)1.59

Price to Cash Flow (P/CF)-37.50

P/FCF Ratio0.00

Enterprise Value/Market Cap1.35

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit5.90

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$89.75

Price Target Upside31.93% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering4

The Toro Company Business Overview & Revenue Model

Company DescriptionThe Toro Company (TTC) is a leading provider of innovative solutions for the outdoor environment. Founded in 1914 and headquartered in Bloomington, Minnesota, the company designs, manufactures, and markets a wide range of turf maintenance equipment, snow removal products, irrigation systems, and other landscape and construction equipment. Toro serves a diverse customer base that includes homeowners, professional contractors, groundskeepers, and agricultural professionals across more than 125 countries.

How the Company Makes MoneyThe Toro Company generates revenue primarily through the sale of its equipment and products, which are categorized into two main business segments: Professional and Residential. The Professional segment, which constitutes the majority of its revenue, includes products such as golf course maintenance equipment, landscape contractor equipment, and irrigation systems for commercial landscapes. The Residential segment offers products like lawnmowers, snow blowers, and irrigation systems for homeowners. Additionally, Toro makes money through after-sales services, parts, and accessories, which provide a steady revenue stream due to the ongoing maintenance needs of its equipment. The company also benefits from strategic partnerships and a global distribution network that enhance its market reach and sales capabilities.

The Toro Company Financial Statement Overview

Summary

The Toro Company exhibits strong financial health with solid profitability and cash generation. The income statement shows stable margins, while the balance sheet reflects low leverage and high returns on equity. Cash flow analysis indicates efficient cash management despite negative financing cash flow. Continued monitoring of revenue trends and capital structure is advisable.

Income Statement

Very Positive

The Toro Company displayed stable revenue with slight fluctuations over recent periods. The TTM gross profit margin is 33.6%, and the net profit margin is 8.9%, indicating solid profitability. The EBIT and EBITDA margins are 11.3% and 14.2% respectively, showing operational efficiency. However, there was a slight decrease in total revenue from the annual 2024 period to TTM, which could be a concern if the trend continues.

Balance Sheet

Positive

The debt-to-equity ratio stands at 0.07, demonstrating low leverage and financial stability. The return on equity (ROE) is 27.7%, showcasing strong returns for shareholders. The equity ratio is 39.7%, suggesting a balanced capital structure. However, fluctuations in equity due to changes in retained earnings may impact future stability.

Cash Flow

Very Positive

Operating cash flow is robust, with a TTM value of $613.5 million. Free cash flow growth indicates strong cash generation capabilities, with a TTM free cash flow of $509.2 million showing significant growth from previous periods. The operating cash flow to net income ratio is 1.51, indicating effective earnings conversion to cash flow. However, financing cash flow is negative, suggesting that the company may be returning capital to shareholders or paying down debt.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
4.58B	4.55B	4.51B	3.96B	3.38B
	Gross Profit
1.55B	1.58B	1.50B	1.34B	1.19B
	EBIT
533.30M	430.70M	575.66M	518.28M	426.36M
	EBITDA
702.90M	578.40M	697.09M	627.79M	535.84M
	Net Income Common Stockholders
418.90M	329.70M	443.30M	409.90M	329.70M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
199.50M	193.10M	188.25M	405.61M	479.89M
	Total Assets
3.58B	3.64B	3.56B	2.94B	2.85B
	Total Debt
1.01B	1.16B	1.07B	761.28M	873.21M
	Net Debt
811.40M	970.00M	881.87M	355.67M	393.32M
	Total Liabilities
2.03B	2.13B	2.20B	1.79B	1.74B
	Stockholders Equity
1.55B	1.51B	1.35B	1.15B	1.11B
Cash Flow		Free Cash Flow
466.40M	157.30M	153.69M	451.46M	461.31M
	Operating Cash Flow
569.90M	306.80M	297.17M	555.47M	539.37M
	Investing Cash Flow
-59.70M	-157.70M	-548.25M	-128.45M	-216.08M
	Financing Cash Flow
-505.10M	-147.50M	42.24M	-503.65M	2.35M

The Toro Company Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price68.03

Price Trends

50DMA

73.06

Negative

100DMA

77.78

Negative

200DMA

81.98

Negative

Market Momentum

MACD

-1.59

Negative

RSI

45.66

Neutral

STOCH

62.78

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TTC, the sentiment is Neutral. The current price of 68.03 is below the 20-day moving average (MA) of 68.16, below the 50-day MA of 73.06, and below the 200-day MA of 81.98, indicating a bearish trend. The MACD of -1.59 indicates Negative momentum. The RSI at 45.66 is Neutral, neither overbought nor oversold. The STOCH value of 62.78 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TTC.

The Toro Company Risk Analysis

The Toro Company disclosed 35 risk factors in its most recent earnings report. The Toro Company reported the most risks in the “Production” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

The Toro Company Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TTC	76 Outperform	$6.79B	17.34	26.98%	2.17%	4.02%	42.77%
RBC	76 Outperform	$10.29B	44.88	8.35%	―	4.62%	21.58%
LECO	74 Outperform	$10.41B	22.79	35.36%	1.57%	-4.23%	-13.42%
SNA	66 Neutral	$17.66B	17.27	19.15%	2.59%	-0.88%	0.04%
TKR	65 Neutral	$4.56B	13.03	13.04%	2.09%	-4.11%	-8.74%
Sector *	61 Neutral	$719.02M	6.47	6.61%	3.72%	0.68%	-25.68%
SWK	49 Neutral	$9.52B	32.54	3.22%	5.31%	-2.63%	―

* Industrials Sector Average

Performance Comparison

TTC

The Toro Company

68.03

-18.31

-21.21%

LECO

Lincoln Electric Holdings

185.76

-35.92

-16.20%

RBC

RBC Bearings

327.13

80.34

32.55%

SNA

Snap-on

308.76

43.47

16.39%

SWK

Stanley Black & Decker

61.58

-26.13

-29.79%

TKR

Timken Company

64.95

-20.32

-23.83%

The Toro Company Earnings Call Summary

Earnings Call Date:Mar 06, 2025

(Q1-2025)

% Change Since: -12.33%|

Next Earnings Date:Jun 05, 2025

Earnings Call Sentiment Neutral

The Toro Company started fiscal 2025 with strong performance in the Professional segment and increased adjusted earnings per share. The AMP initiative showed significant savings, and new product innovations were introduced. However, the Residential segment faced challenges due to lower snow product shipments and higher material costs. The tariff environment remains uncertain.

Q1-2025 Updates

Positive Updates

Strong Professional Segment Growth

Professional segment net sales were $768.8 million, up 1.6% year-over-year, driven by higher shipments of golf and grounds products and zero-turn mowers.

Increased Adjusted Diluted Earnings Per Share

Adjusted diluted earnings per share increased to $0.65, up from $0.64 last year, driven by improved profitability in the Professional segment.

Successful AMP Initiative Implementation

Implemented nearly $50 million in run rate savings in Q1, bringing the total to $64 million, primarily driven by headcount actions and supply-based transformation.

New Product Innovations

Introduced several new products, including the Toro Turf Pro autonomous mower, Toro Range Pro golf ball picking robot, and a partnership with TerraRad for soil moisture mapping technology.

Strong Cash Flow Management

Repurchased $100 million in shares during the quarter, following nearly $250 million in repurchases last year.

Negative Updates

Residential Segment Decline

Residential segment net sales were $221 million, down from $240 million last year, due to lower shipments of snow products and the Pope divestiture.

Below Average Snowfall Impact

Below average snowfall in key markets affected sales, particularly in the residential segment.

Higher Material and Manufacturing Costs

Increased material, manufacturing, and freight costs negatively impacted margins.

Tariff Environment Concerns

Uncertainty due to the rapidly changing tariff environment, particularly regarding new tariffs on China imports.

Company Guidance

During The Toro Company's first-quarter earnings call for fiscal 2025, the company reported nearly $1 billion in net sales, with a notable 1.6% growth in the professional segment, offset by a decline in the residential segment. Adjusted diluted earnings per share increased to $0.65, driven by the company's AMP initiative and improved profitability in the professional segment, which saw earnings rise to $127.2 million, representing 16.5% of net sales. Despite challenges such as elevated snow product inventories and a volatile tariff environment, Toro maintained its full-year guidance for net sales growth between 0% to 1% and adjusted diluted EPS between $4.25 to $4.40. The company plans to strategically reinvest up to half of the $100 million in annualized run-rate savings expected from its AMP initiative by fiscal 2027, with $64 million in savings already realized. The guidance excludes all incremental tariffs introduced year-to-date, apart from those on Chinese imports effective in February. Toro is also committed to driving growth through product innovation in its golf and underground construction businesses.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.