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The Toro Company (TTC)
NYSE:TTC
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The Toro Company
(NYSE:TTC)69Neutral
Positive Factors
Financial Performance
FCF strong, net debt moves lower. FCF was $170m, up from $50m last year, and YTD is up more than $215m versus the prior year.
Technological Advancement
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
Earnings Guidance
Full-year EPS guidance was lowered by ~3% at the midpoint, with implied FQ4 EPS also below the Street.
Earnings Performance
FQ3 results missed expectations, while full-year (and implied FQ4) guidance was lowered.
Sales Performance
Pro sales meaningfully below expectations. Professional sales were -2% yoy, meaningfully below our/Street estimates.
The Toro Company (TTC) vs. S&P 500 (SPY)
Market Cap
$7.59B
Dividend Yield1.94%
Average Volume (3M)1.14M
Price to Earnings (P/E)18.8
Beta (1Y)1.21
Revenue Growth0.86%
EPS Growth27.81%
CountryUS
Employees11,464
SectorIndustrials
Sector Strength66
IndustryIndustrial Goods
Share Statistics
EPS (TTM)4.03
Shares Outstanding100,625,920
10 Day Avg. Volume1,848,409
30 Day Avg. Volume1,144,037
Financial Highlights & Ratios
PEG Ratio0.68
Price to Book (P/B)N/A
Price to Sales (P/S)1.66
Price to Cash Flow (P/CF)7.90
P/FCF Ratio9.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$94.33Price Target Upside20.92% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering4
The Toro Company Business Overview & Revenue Model
Company DescriptionThe Toro Co. designs, manufactures, and markets a range of turf equipment. It operates through the following segments: Professional and Residential. The Professional segment consists of turf & landscape equipment; rental, specialty, and underground construction equipment; snow & ice management equipment; and irrigation products. The Residential segment consists of walk power mowers, riding mowers, snow throwers, replacement parts, and home solutions products, including trimmers, blowers, blower-vacuums, and underground, hose, and hose-end retail irrigation products sold in Australia and New Zealand. The company was founded by John Samuel Clapper and Henry Clay McCartney on July 10, 1914 and is headquartered in Bloomington, MN.
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 demonstrates strong financial health with consistent revenue growth and enhanced profitability margins. The balance sheet reflects a balanced capital structure with manageable leverage, while cash flow metrics indicate robust liquidity and efficient operations. While there are potential risks related to rising liabilities, overall, the company is well-positioned in the industrial goods sector.Income Statement
The Toro Company has demonstrated consistent revenue growth with a 0.67% increase from the previous year. The gross profit margin stands at 33.78%, indicating solid profitability. The net profit margin improved to 9.13%, reflecting enhanced cost management. EBIT and EBITDA margins also show healthy profitability at 11.63% and 15.33%, respectively. However, the slight decline in gross profit from the previous year suggests potential cost pressures.75
Positive
Balance Sheet
The Toro Company's financial stability is supported by a moderate debt-to-equity ratio of 0.65, indicating manageable leverage. The return on equity is strong at 26.98%, highlighting efficient use of shareholder funds. The equity ratio of 43.32% suggests a balanced capital structure with adequate equity financing. Despite these strengths, the increasing trend in total liabilities could pose future risk if not managed properly.70
Positive
Cash Flow
The company exhibits robust cash flow management with a notable 196.56% growth in free cash flow. The operating cash flow to net income ratio of 1.36 indicates strong cash generation relative to earnings. Furthermore, the free cash flow to net income ratio of 1.11 reflects efficient conversion of earnings to cash. These metrics suggest healthy liquidity and operational efficiency.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| 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
Negative
78.01
Price Trends
81.23
Negative
82.49
Negative
85.54
Negative
Market Momentum
-1.14
Positive
41.98
Neutral
21.15
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TTC, the sentiment is Negative. The current price of 78.01 is below the 20-day moving average (MA) of 80.07, below the 50-day MA of 81.23, and below the 200-day MA of 85.54, indicating a bearish trend. The MACD of -1.14 indicates Positive momentum. The RSI at 41.98 is Neutral, neither overbought nor oversold. The STOCH value of 21.15 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $2.50B | 7.60 | 19.13% | 1.81% | -0.47% | -34.74% | |
77 Outperform | $6.15B | 9.21 | 17.34% | 1.98% | 11.36% | 13.78% | |
74 Outperform | $124.41B | 20.32 | 27.91% | 1.29% | -20.93% | -34.33% | |
70 Outperform | $1.38B | 20.35 | 14.32% | 1.13% | -7.17% | -0.53% | |
69 Neutral | $7.59B | 18.79 | 27.35% | 1.94% | 0.86% | 27.81% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% | |
46 Neutral | $6.62B | 46.40 | -10.11% | 1.31% | -19.08% | -136.41% |
* Industrials Sector Average
Performance Comparison
TTC
The Toro Company
78.01
-9.07
-10.42%
AGCO
Agco
91.58
-17.58
-16.10%
DE
Deere
467.50
97.75
26.44%
LNN
Lindsay
129.85
8.54
7.04%
OSK
Oshkosh
96.04
-16.04
-14.31%
TEX
Terex
39.07
-19.46
-33.25%
The Toro Company Earnings Call Summary
Earnings Call Date: Dec 18, 2024 | % Change Since: -8.13% | Next Earnings Date: Mar 6, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong revenue growth, successful new product launches, and strategic partnerships. However, challenges in the Residential segment, snow and ice management, and workforce reduction were notable lowlights. Overall, the highlights slightly outweigh the lowlights, driven by innovation and strategic initiatives.Highlights
Record-Breaking Revenue and Growth
Reported net sales of $4.58 billion for fiscal year 2024, marking a 15th consecutive year of top line growth. Fourth quarter net sales increased by 9.4% over the previous year.
Strong Performance in Professional Segment
Professional segment net sales increased by 10.3% year-over-year in the fourth quarter, driven by higher shipments of golf and grounds products and underground construction equipment.
Significant Free Cash Flow Increase
Free cash flow increased by more than $300 million for the year, enabling nearly $400 million to be returned to shareholders through share repurchases and increased dividends.
New Product Innovations and Strategic Partnerships
Introduction of new products, including the Exmark Lazer Z mowers and a strategic partnership with Lowe's, recognized as Vendor of the Year.
AMP Initiative Success
Productivity initiative AMP delivered $14.5 million in annualized run rate cost savings, slightly ahead of expectations.
Lowlights
Challenges in Residential Segment
Residential segment reported a loss of $13.8 million in the fourth quarter, impacted by higher material and freight costs and unfavorable product mix.
Snow and Ice Management Struggles
Two consecutive seasons of below average snowfall negatively impacted the snow and ice management businesses.
Field Inventory and Backlog Issues
Field levels remained higher than ideal for lawn care and snow products, with a significant order backlog of $1.2 billion.
Workforce Reduction
Reduced workforce by approximately 300 salaried employees to better align organizational structure with strategic priorities.
Company Guidance
During the earnings call for The Toro Company's Q4 2024 results, the executives provided detailed guidance for fiscal 2025. They anticipate total company net sales growth between 0% and 1%, driven by low single-digit growth in the Professional segment and a high single-digit decline in the Residential segment. The company expects adjusted gross margins and adjusted operating earnings margins to improve, with a full-year adjusted diluted EPS projected between $4.25 and $4.40. Capital expenditures are expected to remain steady at about $100 million, with an adjusted effective tax rate of about 20%. The company aims for a free cash flow conversion rate around 100% of reported net income. Key drivers include the continued strength in the underground construction and golf and grounds segments, while noting the need to normalize field inventory levels in lawn care and snow products.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.