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	71.62
Change Percentage	0.43%
Open	71.19
Previous Close	71.32
Market Cap ( Millions)	7009
Volume	49390
Year High	89.5
Year Low	62.34
M A 50	73.34
M A 200	73.95

FCF Yield	7.02%
Dividend Yield	2.12%
ROE	22.55%
Debt / Equity	80.90%
Net Debt / EBIDTA	158.22%
Price To Book	5.01
Price Earnings Ratio	21.25
Price To FCF	14.24
Price To sales	1.55
EV / EBITDA	13.37

2. The Toro Company's Q3 2025 Earnings Analysis

The Toro Company reported Q3 2025 adjusted earnings of $1.24 per share, exceeding expectations. Total net sales were $1.13 billion, down 2.2% year-over-year, partly due to divestitures. The Professional segment saw 6% year-over-year growth, driven by robust demand in golf and underground construction. Residential sales fell 28% amid consumer caution and inventory adjustments.

Publication Date: Sep -07

                                    📋 Highlights
                                    Professional Segment Outperformance:
                                                Delivered 6% YoY sales growth ($931M) and 250 bps margin expansion (21.3%) driven by golf/grounds and underground construction demand.
Residential Sales Collapse:
                                                Fell 28% YoY to $193M due to consumer caution and inventory destocking, contributing to 2.2% total sales decline to $1.13B.
Margin Resilience:
                                                Adjusted EPS of $1.24 exceeded expectations, with 33.7% gross margin (34.8% prior year) and SG&A reduction to 20.8% of sales.
2025 Guidance:
                                                Total sales flat to -3% growth, EPS at $4.15; $292M free cash flow generated, $290M in share buybacks YTD.
Strategic Priorities:
                                                $75M annualized AMP savings (target $100M by 2027), innovation in electric products (e.g., Ventrac 45RC), and tariff mitigation efforts.

                                

Financial Performance

Adjusted EPS was $1.24, with net sales at $1.13 billion. The Professional segment's revenue grew 6% to $931 million, with a 21.3% margin. Residential segment sales declined 28% to $193 million. Gross margins were 33.7% versus 34.8% last year, with SG&A at 20.8%. Free cash flow reached $292 million through September, with $290 million in share repurchases year-to-date.

Guidance and Outlook

Full-year guidance anticipates flat to down 3% total sales, with Professional revenue up slightly and Residential down mid-teens. Adjusted EPS is projected at $4.15. The company is focused on long-term strategy, including the AMP cost savings program, innovation in electric and autonomous products, and tariff mitigation. Inventory reductions in residential position the company for 2026 growth.

Valuation Metrics

With a P/E Ratio of 24.22, P/B Ratio of 5.72, and ROE of 22.55%, the company's valuation reflects a premium for its growth prospects. The dividend yield is 1.84%, indicating a relatively stable return for shareholders. The EV/EBITDA ratio is 15.13, suggesting a reasonable enterprise value relative to its earnings before interest, taxes, depreciation, and amortization.

Operational Highlights

The Professional segment's strength was driven by demand in golf and underground construction. The company is making progress in balancing inventory across sectors, with underground still understocked and golf/grounds aligned. Residential is set up for 2026 growth, with ongoing efforts to reduce excess inventory, particularly in snow equipment from 2022-2023.

3. NewsRoom

Toro Sees Unusually Large Options Volume (NYSE:TTC)

Nov -27

Source: defenseworld.net

The Toro Company to Announce Fiscal 2025 Full-Year Results

Nov -25

Source: businesswire.com

All You Need to Know About Toro (TTC) Rating Upgrade to Buy

Nov -04

Source: zacks.com

The Toro Company: Stuck In The Weeds (Rating Downgrade)

Oct -23

Source: seekingalpha.com

The Toro Company Names Heather M. Hille Vice President of Corporate Affairs and Investor Relations

Oct -08

Source: businesswire.com

The Toro Company Names Grant M. Young Group Vice President of Golf, Grounds and Irrigation

Oct -07

Source: businesswire.com

The Toro Company to Acquire Tornado Infrastructure Equipment Ltd.

Oct -06

Source: businesswire.com

These Analysts Boost Their Forecasts On Toro Following Q3 Results

Sep -05

Source: benzinga.com

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: 6.8/10

Value: 3.9

Growth: 6.0

Quality: 8.1

Yield: 6.0

Momentum: 7.5

Volatility: 9.0

1-Year Total Return ->

Lincoln Electric

A-Score: 5.4/10

Value: 2.4

Growth: 6.4

Quality: 6.3

Yield: 2.0

Momentum: 7.5

Volatility: 7.7

1-Year Total Return ->

RBC Bearings

A-Score: 5.3/10

Value: 0.8

Growth: 7.4

Quality: 6.8

Yield: 0.0

Momentum: 8.5

Volatility: 8.3

1-Year Total Return ->

Toro

A-Score: 5.1/10

Value: 4.1

Growth: 6.1

Quality: 5.8

Yield: 3.0

Momentum: 3.5

Volatility: 8.0

1-Year Total Return ->

Timken

A-Score: 4.9/10

Value: 5.4

Growth: 5.1

Quality: 4.6

Yield: 4.0

Momentum: 3.5

Volatility: 7.0

1-Year Total Return ->

Stanley Black & Decker

A-Score: 4.2/10

Value: 4.9

Growth: 3.1

Quality: 3.9

Yield: 7.0

Momentum: 1.0

Volatility: 5.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-2.23%

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. The Toro Company's Q3 2025 Earnings Analysis

Financial Performance

Guidance and Outlook

Valuation Metrics

Operational Highlights

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

71.62$

Current Price

71.62$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA