The Toro Company (TTC) | Investment Case

1. Company Snapshot

1.a. Company Description

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.

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, zero-turn riding mowers, snow throwers, replacement parts, and home solution products that include grass and hedge trimmers, leaf blowers, blower-vacuums, chainsaws, string trimmers, hoses, and hose-end retail irrigation products.This segment sells its products to homeowners through a network of distributors and dealers; and home centers, hardware retailers, and mass retailers, as well as online.

The Toro Company was founded in 1914 and is headquartered in Bloomington, Minnesota.

Show Full description

1.b. Last Insights on TTC

The Toro Company's recent performance has been positively driven by its Q2 earnings beat, with adjusted EPS of $1.42, surpassing estimates. Revenue decline of 2.3% to $1.32 billion was offset by cost-cutting initiatives. The company's Residential segment showed revenue growth, while profitability stabilized. A sustainability report highlighted progress towards strategic priorities. Recent announcements include the sale of Trencor Brand and appointment of Edric C. Funk as President and COO. These developments position the company for future growth. (Source: Bloomberg)

1.c. Company Highlights

Last Price	99.77
Change Percentage	0.30%
Open	100
Previous Close	99.47
Market Cap ( Millions)	9768
Volume	1121452
Year High	105.19
Year Low	62.34
M A 50	92.59
M A 200	79.09

FCF Yield	6.76%
Dividend Yield	1.53%
ROE	23.00%
Debt / Equity	7.90%
Net Debt / EBIDTA	-13.17%
Price To Book	6.89
Price Earnings Ratio	29.52
Price To FCF	14.79
Price To sales	2.15
EV / EBITDA	16.59

2. Toro's Strong Q1 2026 Earnings: A Testament to Strategic Execution

The Toro Company's first quarter 2026 earnings report showcased a robust financial performance, driven by the company's strategic priorities. Consolidated net sales rose 4.2% to $1.04 billion, with the Professional segment contributing $824 million and the Residential segment generating $216 million. Adjusted earnings per share (EPS) came in at $0.74, surpassing expectations and the prior year's $0.65. The actual EPS was $0.691, slightly below the adjusted EPS but still above estimates. The company's adjusted gross margin rate expansion and operating earnings margin improvement were key drivers of the strong EPS performance.

Publication Date: Mar -06

                                    📋 Highlights
                                    Strong Q1 Sales Growth::
                                                Consolidated net sales rose 4.2% to $1.04 billion, with Professional segment reaching $824 million and Residential at $216 million.
EPS Outperforms Expectations::
                                                Adjusted earnings per share jumped to $0.74, up from $0.65 in the prior year, driven by operational efficiency.
Free Cash Flow Expansion::
                                                Generated $14.6 million in free cash flow with a 22% conversion rate, projecting at least 120% conversion for 2026.
Strategic Acquisition::
                                                Acquired Tornado Infrastructure Equipment to expand hydrovac excavation solutions, enhancing Professional segment capabilities.
AMP Program Success::
                                                Achieved $95 million in cost savings toward a $125 million target, supporting margin expansion and strategic investments.

                                

Segment Performance

The Professional segment benefited from higher shipments of snow and ice products, underground construction, and growth in the landscape business. The Residential segment also saw increased shipments of snow and ice products and net price realization. As Angie Drake mentioned, the company's expectations for the full year anticipate a slight increase in net realized price and organic growth driven by the Professional segment, particularly in underground, Professional contractor, Golf, and Grounds.

Operational Highlights

The company's AMP program contributed $95 million in cost savings towards its aggregate goal of $125 million. The acquisition of Tornado Infrastructure Equipment expanded the company's hydrovac excavation solutions, and the introduction of new products, such as the Exmark Lazer and Radius, has been well-received by the market. The company's autonomous turf maintenance solutions and water management suite are expected to drive future growth.

Outlook and Valuation

Toro is raising its sales and earnings outlook for fiscal 2026, with total company net sales growth expected to be 3% to 6.5% and adjusted EPS guidance raised to $4.40 to $4.60. The company's strong balance sheet and free cash flow position it well to invest in technological innovations and growth markets. With a current P/E Ratio of 29.27 and an EV/EBITDA of 17.53, the market appears to have priced in a significant level of growth. Analysts estimate next year's revenue growth at 4.6%, which is slightly below the company's current guidance. The company's ROIC of 12.98% and ROE of 23.0% indicate a strong ability to generate returns on invested capital.

Growth Prospects

The company's Ditch Witch business continues to show steady growth in profitability since the acquisition in 2019. The company's approach to M&A, focusing on areas where they can compete and win, particularly on the Professional side, is expected to drive future growth. With a healthy channel inventory position and a strong product pipeline, Toro is well-positioned to deliver sustainable, profitable growth.

3. NewsRoom

Toro Q1 Earnings Call Highlights

Mar -08

Source: defenseworld.net

The Toro Company (TTC) Q1 2026 Earnings Call Transcript

Mar -05

Source: seekingalpha.com

Toro (TTC) Q1 Earnings and Revenues Top Estimates

Mar -05

Source: zacks.com

The Toro Company Reports Fiscal 2026 First-Quarter Results and Raises Full-Year Guidance

Mar -05

Source: businesswire.com

The Toro Company to Announce Fiscal 2026 First Quarter Results

Mar -02

Source: businesswire.com

Toro Company (The) (TTC) Soars to 52-Week High, Time to Cash Out?

Feb -23

Source: zacks.com

Investors Buy High Volume of Toro Put Options (NYSE:TTC)

Feb -20

Source: defenseworld.net

Toro Company (The) (NYSE:TTC) Given Consensus Rating of “Hold” by Brokerages

Feb -18

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.82%)

6. Segments

Professional

Expected Growth: 3%

The Toro Company's professional segment growth is driven by increasing demand for outdoor equipment and irrigation systems from golf courses, sports fields, and municipalities. Additionally, the company's focus on innovation, product diversification, and strategic acquisitions have contributed to its growth. Furthermore, the rising trend of outdoor living and landscaping has also boosted sales.

Residential

Expected Growth: 2%

Residential segment growth driven by increasing demand for outdoor living spaces, rising popularity of DIY landscaping, and Toro's innovative product offerings such as zero-turn mowers and snow blowers, which cater to the growing need for efficient and convenient lawn care solutions.

Other

Expected Growth: 4%

The Toro Company's 'Other' segment growth is driven by increasing demand for its precision irrigation systems, expansion into emerging markets, and strategic acquisitions. Additionally, investments in digital technologies and data analytics are enhancing customer experience and driving sales. Furthermore, the company's focus on sustainability and water conservation is resonating with environmentally conscious consumers, contributing to its growth.

7. Detailed Products

Lawn Mowers

Residential and commercial lawn mowers designed for efficient cutting and maintenance of lawns

Irrigation Systems

Water-saving irrigation systems for golf courses, sports fields, and agricultural applications

Snow Removal Equipment

Snow blowers, plows, and salt spreaders for residential and commercial snow removal

Landscape Equipment

Aeration, dethatching, and seeding equipment for lawn care professionals and homeowners

Golf Course and Sports Field Equipment

Specialized equipment for golf course and sports field maintenance, including mowers, aerators, and topdressers

Batteries and Chargers

Lithium-ion batteries and chargers for outdoor power equipment

Lighting and Controls

Outdoor lighting and control systems for residential and commercial applications

8. The Toro Company's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for The Toro Company is medium due to the presence of alternative products in the market, such as electric and battery-powered lawn mowers.

Bargaining Power Of Customers

The bargaining power of customers for The Toro Company is low due to the company's strong brand reputation and wide distribution network.

Bargaining Power Of Suppliers

The bargaining power of suppliers for The Toro Company is medium due to the presence of multiple suppliers in the market, but the company's large scale of operations gives it some bargaining power.

Threat Of New Entrants

The threat of new entrants for The Toro Company is low due to the high barriers to entry in the lawn and garden equipment industry, including high capital requirements and established distribution networks.

Intensity Of Rivalry

The intensity of rivalry for The Toro Company is high due to the presence of several established competitors in the market, including Deere & Company and Husqvarna AB.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	43.50%
Debt Cost	6.13%
Equity Weight	56.50%
Equity Cost	7.53%
WACC	6.92%
Leverage	76.98%

11. Quality Control: The Toro Company passed 4 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Snap-on

A-Score: 6.3/10

Value: 4.3

Growth: 6.0

Quality: 8.2

Yield: 6.0

Momentum: 4.5

Volatility: 9.0

1-Year Total Return ->

Timken

A-Score: 5.5/10

Value: 5.8

Growth: 5.0

Quality: 5.2

Yield: 4.0

Momentum: 6.0

Volatility: 7.0

1-Year Total Return ->

RBC Bearings

A-Score: 5.3/10

Value: 0.9

Growth: 7.3

Quality: 6.6

Yield: 0.0

Momentum: 8.5

Volatility: 8.7

1-Year Total Return ->

Lincoln Electric

A-Score: 5.3/10

Value: 2.2

Growth: 6.4

Quality: 6.6

Yield: 2.0

Momentum: 7.0

Volatility: 7.7

1-Year Total Return ->

Toro

A-Score: 4.8/10

Value: 3.9

Growth: 5.4

Quality: 6.0

Yield: 3.0

Momentum: 3.0

Volatility: 7.7

1-Year Total Return ->

Stanley Black & Decker

A-Score: 4.5/10

Value: 5.1

Growth: 3.1

Quality: 4.2

Yield: 7.0

Momentum: 2.5

Volatility: 5.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-1.39%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.92%

The Toro Company - US8910921084

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on TTC

1.c. Company Highlights

Expensive

Weak Momentum

Medium Volatility

Earnings Miss

Earnings Beats

Stable Momentum

Average Growth

Revenues Miss

Average Quality

Fairly Valued

Better Quality

Less Volatile

Revenues Beats

2. Toro's Strong Q1 2026 Earnings: A Testament to Strategic Execution

Segment Performance

Operational Highlights

Outlook and Valuation

Growth Prospects

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.82%)

6. Segments

Professional

Expected Growth: 3%

Residential

Expected Growth: 2%

Other

Expected Growth: 4%

7. Detailed Products

Lawn Mowers

Irrigation Systems

Snow Removal Equipment

Landscape Equipment

Golf Course and Sports Field Equipment

Batteries and Chargers

Lighting and Controls

8. The Toro Company's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: The Toro Company passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

99.77$

Current Price

99.77$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA