Toro
TTC
$107.28
+0.40%
The Toro Company designs, manufactures, and markets professional turf maintenance equipment, irrigation systems, landscaping and lighting products, snow and ice management equipment, and residential yard care products, operating primarily in the industrial machinery and tools sector. Toro is a recognized brand leader in the niche outdoor power equipment market, with its Professional segment (commercial, agricultural, and construction customers) generating the majority of revenue while the Residential segment serves homeowners through distributors, dealers, and retailers. The current investor narrative centers on a cyclical recovery story: after a multi-year destocking and margin-compression downturn, Toro has posted accelerating revenue growth and sharply improving profitability, with Q3 FY2026 revenue up 8.35% year-over-year and EPS nearly doubling versus the prior-year quarter. Management's execution on cost discipline, working capital normalization, and aggressive share repurchases has driven a 42% one-year stock gain, though the debate now hinges on whether the recovery is fully priced and whether tariff and input-cost pressures could cap further margin expansion.…
TTC
Toro
$107.28
Investment Opinion: Should I buy TTC Today?
Rating: Hold, with a constructive bias. The core thesis is that Toro's cyclical recovery is real and cash-generative — Q3 FY2026 net income rose 44% to $77 million on 8.35% revenue growth, TTM free cash flow of $711.5 million equates to a roughly 9.6% FCF yield on the $7.44 billion market cap, and the implied forward PE of about 17.8x (on the $5.88 consensus EPS) sits well below the 23.5x trailing multiple. However, with the stock at $104.84 — about 98% of its $108.84 52-week high after a 42.45% one-year rally — and analyst sentiment limited to one Buy, two Neutral/Market Perform ratings, and a February 2026 Raymond James downgrade, the risk/reward is balanced rather than compelling at current levels.
Supporting evidence for holding rather than selling: revenue growth accelerated for three consecutive quarters (4.3% in Q1, 8.1% in Q2, 8.35% in Q3 FY2026), operating margin nearly doubled year-over-year to 9.40% from 5.73%, and diluted shares fell from 98.5 million to 95.6 million via $73 million of Q3 and $218.2 million of Q2 buybacks. Valuation is moderate — 1.65x PS, 14.7x EV/EBITDA, 11.2x price-to-cash-flow — and the 21.75% ROE with a 2.03% dividend yield and 47.8% payout ratio supports a total-return profile. The single analyst's tight EPS range of $5.80-$6.03 (about 4% wide) signals high near-term conviction but also limited surprise potential.
Key risks that could invalidate the thesis: gross margin of 34.11% improved only 36 basis points year-over-year, so tariff and input-cost pressure could stall the margin recovery short of the 13%+ operating margin peak; thin coverage (one analyst) makes the stock volatile around earnings; and a Professional-segment demand slowdown would hit the ~90% of segment revenue tied to Equipment Products and Services. This Hold would upgrade to Buy on a pullback toward the $96-$98 October breakout zone (implying roughly 15.5x-16.5x forward EPS) or on evidence that operating margin is tracking sustainably above 11%; it would downgrade to Sell if forward EPS estimates fall below $5.50 or gross margin slips back toward the 33% level. Net verdict: fairly valued relative to its own historical PE range (12.9x-40x) and modestly attractive versus the broader industrial machinery sector, but not undervalued after the rally.
Sign up to view all
TTC 12-Month Price Forecast
Toro presents a genuine but largely priced-in cyclical recovery: three consecutive quarters of accelerating revenue growth, a 44% jump in Q3 net income, and a 9.6% FCF yield are offset by a stock trading near its 52-week high with only neutral-to-mildly-positive analyst sentiment. The 17.8x implied forward PE is reasonable versus the 23.5x trailing multiple and the 12.9x-40x historical range, but it already discounts the earnings recovery embedded in the $5.88 consensus estimate. The decisive variable is margin trajectory — whether operating margin can climb from 10.89% TTM toward the 13%+ FY2022 peak, or whether 34% gross margin caps the recovery. I would upgrade to bullish on a pullback to the $96-$98 breakout zone or on evidence of operating margin sustainably above 11%, and downgrade to bearish if forward EPS estimates fall below $5.50 or gross margin retreats toward 33%.
Wall Street consensus
Analyst coverage of Toro is thin, with only 1 analyst providing estimates in the provided dataset, which limits the reliability of consensus signals. The sole analyst estimates EPS of $5.88 (range $5.80-$6.03) and revenue of $5.39 billion (range $5.33-$5.50 billion) for the forward period. Using the $5.88 EPS estimate and the current price of $104.84, the stock trades at roughly 17.8x forward earnings — a multiple that implies the analyst sees moderate earnings growth but not aggressive re-rating. No explicit price target or Buy/Hold/Sell distribution is available in the provided data, so implied upside to a consensus target cannot be calculated; based on the institutional ratings history, sentiment leans cautiously positive: DA Davidson has maintained a Buy rating through 2025 and 2026, Baird has stayed Neutral, Raymond James downgraded from Outperform to Market Perform in February 2026, and Northland Capital Markets holds a Market Perform. This distribution — one Buy, two Neutral/Market Perform, and one downgrade — suggests a neutral-to-mildly-bullish consensus with limited conviction. The target range implied by the EPS estimates ($5.80 low to $6.03 high) is tight, spanning only about 4%, which signals relatively high conviction in the near-term earnings trajectory among the covering analyst(s). The high-end EPS estimate of $6.03 would imply a forward PE of 17.4x at the current price, while the low end of $5.80 implies 18.1x — a narrow band that suggests the analyst sees limited earnings surprise potential in either direction. The more meaningful signal is the ratings pattern: the Raymond James downgrade in February 2026 and the persistent Neutral stance from Baird indicate that some analysts believe the recovery is already reflected in the stock price after the 42% one-year rally. With only one analyst contributing estimates, price discovery is less efficient, and the stock may be more susceptible to volatility around earnings releases. Investors should treat the consensus data with caution given the limited coverage and monitor for additional analyst initiations or target updates as the recovery matures.
Bulls vs Bears: TTC Investment Factors
The bull case currently holds the stronger evidence: three consecutive quarters of accelerating revenue growth, a 44% jump in Q3 net income, a 9.6% FCF yield, and a forward PE of 17.8x that is well below the 23.5x trailing multiple. The bear case rests less on fundamentals than on positioning — a 42% one-year rally has pushed the stock to 98% of its 52-week high, analyst sentiment is only neutral-to-mildly-positive with one Buy and a February downgrade, and margins remain below the FY2022 peak. The single most important tension is whether margin expansion can continue from 10.89% TTM operating margin toward the 13%+ historical peak; if tariffs and input costs cap gross margin near 34%, the earnings recovery implied by the 17.8x forward multiple may disappoint and the stock has little room to re-rate. Conversely, if operating leverage continues at the Q3 pace, the forward earnings estimate could prove conservative and justify further upside.
Bullish
- Earnings inflecting sharply on operating leverage: Q3 FY2026 net income rose 44% to $77 million on only 8.35% revenue growth, lifting net margin to 6.28% from 4.73% a year earlier. Operating margin nearly doubled to 9.40% from 5.73%, and EBITDA margin expanded to 12.16% from 9.29%, showing that incremental volume is dropping through to profit at a high rate.
- Revenue growth accelerating through the fiscal year: Year-over-year revenue growth stepped up from 4.3% in Q1 FY2026 ($1.038B vs $995M) to 8.1% in Q2 ($1.425B vs $1.318B) to 8.35% in Q3 ($1.226B vs $1.131B). Three consecutive quarters of accelerating growth confirm a genuine cyclical recovery rather than a one-off seasonal bounce.
- Strong free cash flow and aggressive buybacks: TTM free cash flow of $711.5 million against a $7.44 billion market cap implies roughly a 9.6% FCF yield, and Q3 operating cash flow of $182.7 million covered $23.1 million of capex nearly 8x. Management repurchased $73 million of stock in Q3 and $218.2 million in Q2, shrinking diluted shares from 98.5 million to 95.6 million and compounding per-share earnings growth.
- Reasonable forward valuation versus trailing multiple: At $104.84 and the $5.88 consensus EPS estimate, the stock trades at about 17.8x forward earnings versus a 23.5x trailing PE, implying the market expects meaningful earnings growth. EV/EBITDA of 14.7x and PS of 1.65x are moderate for an industrial with a 21.75% ROE and 2.03% dividend yield.
Bearish
- Recovery likely already priced in: After a 42% one-year rally, the stock sits at roughly 98% of its 52-week high of $108.84, leaving little margin of safety. Raymond James downgraded from Outperform to Market Perform in February 2026 and Baird has stayed Neutral, signaling that some analysts believe the recovery is fully reflected in the price.
- Thin analyst coverage limits conviction: Only one analyst contributes EPS and revenue estimates, and the ratings distribution is one Buy, two Neutral/Market Perform, and one downgrade. With no explicit consensus price target available, price discovery is less efficient and the stock is more vulnerable to volatility around earnings releases.
- Margins still below historical peak: TTM operating margin of 10.89% and net margin of 7.01% remain well below the FY2022 peak when operating margins exceeded 13%. Gross margin of 34.11% in Q3 improved only 36 basis points year-over-year, suggesting tariff and input-cost pressures are capping the pace of margin recovery.
- Cyclical exposure to discretionary and commercial demand: Revenue is concentrated in the Professional segment, where Equipment Products and Services alone generated $1.104 billion, about 90% of segment revenue. Commercial landscaping, construction, and residential yard-care spending are sensitive to interest rates and macro conditions, and the prior multi-year destocking downturn demonstrates how sharply volumes can fall.
TTC Technical Analysis
Toro is in a sustained, powerful uptrend, with the stock up 42.45% over the past year and 30.77% year-to-date, dramatically outperforming the S&P 500's 9.59% and 7.83% respective returns. At a current price of $104.84, the stock sits essentially at the top of its 52-week range, having traded as low as roughly $87 in early June and as high as $108.84 on November 2 — meaning the current price is approximately 98% of the 52-week high. This positioning signals strong momentum but also raises the risk of overextension, particularly given the stock's max drawdown of -14.3% over the period, which underscores that pullbacks in this name can be sharp. The relative strength versus SPY is exceptional at +32.86 percentage points over one year and +22.94 points YTD, confirming Toro as a market leader in this cycle. Short-term momentum is accelerating: the stock gained 8.73% over the past month versus a -4.99% decline for SPY, a 13.72-point relative strength spread, and added 5.22% over three months against SPY's -4.91%. This acceleration is notable because it comes after a mid-year consolidation phase — the stock traded in the $87-$100 range from June through September before breaking out decisively in October, when it rallied from $96.65 on October 12 to $108.84 by November 2. The 1-month gain outpacing the 3-month gain (8.73% vs. 5.22%) confirms momentum is building rather than fading, and the recent pullback to $104.84 (-2.76% from the November 2 high) appears to be a healthy consolidation rather than a trend reversal. Volume of 669,658 shares on the latest session is modest, suggesting the pullback is occurring on lighter selling pressure. Key technical support sits at the $96-$98 breakout zone from October, with deeper support at the June low near $87. Resistance is defined by the November 2 high of $108.84; a clean breakout above that level would signal continuation of the uptrend and likely target the $115-$120 area. A breakdown below $96 would invalidate the October breakout and suggest a return to the prior range, while a drop below $87 would mark a significant trend reversal. Beta data is not available in the provided dataset, but the -14.3% max drawdown and the stock's 42% one-year move imply above-market volatility, warranting careful position sizing.
Beta
—
—
Max Drawdown
-14.3%
Largest decline past year
52-Week Range
—
Price range past year
Annual Return
+48.3%
Cumulative gain past year
| Period | TTC Return | S&P 500 |
|---|---|---|
| 1m | +11.0% | -2.4% |
| 3m | +11.0% | -2.3% |
| 6m | +21.0% | +2.8% |
| 1y | +48.3% | +11.3% |
| ytd | +33.8% | +11.4% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
TTC Fundamental Analysis
Toro's revenue trajectory has inflected decisively upward after a prolonged downturn. Q3 FY2026 revenue came in at $1.226 billion, up 8.35% year-over-year from $1.131 billion in Q3 FY2025, marking a clear acceleration from the prior-year period when revenue declined. The multi-quarter trend is encouraging: Q1 FY2026 revenue of $1.038 billion grew 4.3% over Q1 FY2025's $995 million, Q2 FY2026 revenue of $1.425 billion grew 8.1% over Q2 FY2025's $1.318 billion, and Q3's 8.35% growth represents the strongest quarter of the fiscal year. Within the business, the Equipment Products and Services segment dominates at $1.104 billion (roughly 90% of segment revenue), while Irrigation contributes $122 million; the professional segment's recovery is the primary growth engine as commercial landscaping and construction demand stabilizes. The sequential revenue pattern — $1.038B, $1.425B, $1.226B — reflects normal seasonality (Q2 is peak spring season), but the year-over-year comparisons confirm genuine recovery rather than just seasonal noise. Profitability has improved materially. Q3 FY2026 net income was $77 million with a net margin of 6.28%, up from $53.5 million and a 4.73% margin in Q3 FY2025 — a 44% increase in net income on 8.35% revenue growth, demonstrating strong operating leverage. Gross margin expanded to 34.11% in Q3 FY2026 from 33.75% a year earlier, while operating margin jumped to 9.40% from 5.73%, and EBITDA margin rose to 12.16% from 9.29%. The Q2 FY2026 quarter was even stronger, with a 10.21% net margin and 13.69% operating margin, though Q3 typically sees sequential margin compression due to seasonality. The trailing twelve-month net margin of 7.01% and operating margin of 10.89% remain below the company's historical peak levels (operating margins exceeded 13% in FY2022), suggesting there is still room for margin recovery as volumes improve and cost pressures ease. Balance sheet and cash flow metrics are solid. The company generated $711.5 million in trailing twelve-month free cash flow against a market cap of $7.44 billion, implying a robust FCF yield of roughly 9.6% — a strong signal of cash-generating capability. Debt-to-equity stands at 0.72, moderate for an industrial manufacturer, and the current ratio of 1.87 indicates ample liquidity. ROE is an impressive 21.75%, well above the cost of capital, reflecting efficient capital deployment. The company has been aggressively returning capital: it repurchased $73 million of stock in Q3 FY2026 alone and $218.2 million in Q2 FY2026, while paying $37 million in dividends (2.03% yield, 47.8% payout ratio). Operating cash flow of $182.7 million in Q3 covered capital expenditures of $23.1 million nearly 8x, and the company reduced debt by $55 million in the quarter. The combination of strong FCF generation, declining share count (from 98.5 million diluted shares in Q4 FY2025 to 95.6 million in Q3 FY2026), and a manageable debt load paints a picture of financial health with ample internal funding capacity.
Quarterly Revenue
$1.2B
2026-07
Revenue YoY Growth
+8.3%
YoY Comparison
Gross Margin
34.1%
Latest Quarter
Free Cash Flow
$711500000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
Open an Account, get $2 TSLA now!
Valuation Analysis: Is TTC Overvalued?
Because Toro is profitable (Q3 FY2026 net income of $77 million, TTM net margin of 7.01%), the PE ratio is the appropriate primary valuation metric. The stock trades at a trailing PE of 23.5x, which is reasonable for an industrial manufacturer in a cyclical recovery. The forward PE is reported as -1.10, which appears to be a data anomaly (likely reflecting a sign error or non-standard calculation); using the analyst consensus EPS estimate of $5.88 against the current price of $104.84 implies a forward PE of approximately 17.8x, a meaningful discount to the trailing multiple. This gap between trailing (23.5x) and implied forward (17.8x) multiples signals that the market expects earnings to grow substantially over the next twelve months — consistent with the recovery trajectory and the analyst revenue estimate of $5.39 billion. The PEG ratio of -1.10 is also distorted by the same data issue and should not be relied upon. On a price-to-sales basis, Toro trades at 1.65x, and its EV/EBITDA of 14.72x is moderate for an industrial with mid-single-digit growth. Peer comparison is constrained by the absence of explicit industry average multiples in the provided valuation data, but contextually, Toro's 23.5x trailing PE and 14.7x EV/EBITDA sit in line with or slightly below the broader industrial machinery sector, which typically trades in the 15-20x EV/EBITDA range. The 5.12x price-to-book ratio is elevated relative to the 21.75% ROE, but the PB is inflated by the company's substantial share repurchases reducing book equity. The 2.03% dividend yield and 47.8% payout ratio are consistent with a mature industrial, and the 11.2x price-to-cash-flow ratio is attractive given the strong FCF generation. Historically, Toro's PE ratio has ranged widely: it hit 40x in Q1 FY2025 during the earnings trough, 33.8x in Q3 FY2025, 28.4x in Q3 FY2026, and has traded as low as 12.9x in Q2 FY2025 and 15.6x in Q2 FY2026. The current 23.5x trailing PE sits in the middle of this range — above the cyclical trough multiples but well below the peak-stress levels — suggesting the market is pricing in a normalizing earnings recovery rather than euphoria. The PS ratio of 1.65x is near the low end of its historical range (which has spanned roughly 5.3x to 10.9x over the past several years, though those figures appear to be calculated on different share-count or data bases), implying the stock is not expensive on a revenue basis. Overall, valuation appears fair-to-attractive for a company with recovering margins, strong FCF, and a 21.75% ROE, though the recent 42% run-up leaves less margin of safety than existed at the June lows.
PE
23.5x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 13x~44x
vs. Industry Avg
23.5x
Industry PE ~23.5x*
EV/EBITDA
14.7x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks center on margin recovery that is still incomplete and dependent on volume. TTM operating margin of 10.89% and net margin of 7.01% sit well below the FY2022 peak above 13%, and Q3 gross margin of 34.11% improved only 36 basis points year-over-year, indicating tariff and input-cost pressure is absorbing much of the operating leverage. Revenue is heavily concentrated in the Professional segment, where Equipment Products and Services generated $1.104 billion, roughly 90% of segment revenue, so a slowdown in commercial landscaping or construction demand would hit the core of the business. Debt-to-equity of 0.72 and interest expense of $13.8 million in Q3 are manageable against $711.5 million of TTM free cash flow, but the company is relying on continued earnings growth to justify a 23.5x trailing PE and a 5.12x price-to-book inflated by buybacks.
Market and competitive risks are dominated by valuation compression after a 42% one-year rally. The stock trades at roughly 98% of its 52-week high of $108.84, and with only one analyst contributing estimates and a ratings mix of one Buy, two Neutral/Market Perform, and a February 2026 Raymond James downgrade, conviction is thin and the stock is exposed to volatility around earnings. Toro competes in outdoor power equipment against larger, better-capitalized players and low-cost imports, and its premium brand positioning offers limited protection if pricing pressure intensifies. Beta is not provided in the dataset, but the -14.3% max drawdown over 180 days and the 42% one-year move imply above-market volatility, and the stock's +32.86 point relative strength versus SPY makes it vulnerable to sector rotation if investors rotate out of industrials.
In a worst-case scenario, a demand slowdown in the Professional segment would coincide with tariff-driven gross margin compression, causing the forward EPS estimate of $5.88 to be revised down and the multiple to compress simultaneously. A return to the June low near $87 would represent roughly a 17% decline from the current $104.84, while a retest of the -14.3% max drawdown from the November 2 high of $108.84 would imply a price near $93, about 11% below current levels. A more severe outcome — a full cyclical rollover similar to the prior destocking downturn — could push the stock back toward the low end of its historical PE range of 12.9x, which on $5.88 of EPS would imply roughly $76, a 27% loss from the current price. Investors should size positions for a realistic 15-25% drawdown in an adverse scenario.
FAQ
Ranked by severity: first, margin-recovery risk — Q3 gross margin of 34.11% improved only 36 basis points year-over-year and TTM operating margin of 10.89% remains below the FY2022 peak above 13%, so tariff and input-cost pressure could stall the earnings inflection that the 17.8x forward multiple already discounts. Second, cyclical concentration — the Professional segment's Equipment Products and Services generated $1.104 billion, roughly 90% of segment revenue, leaving the company exposed to commercial landscaping and construction demand, which the prior multi-year destocking downturn showed can fall sharply. Third, valuation and positioning risk — at 98% of the 52-week high after a 42.45% one-year gain and +32.86 points of relative strength versus SPY, the stock is vulnerable to sector rotation out of industrials, with a -14.3% max drawdown showing how sharp pullbacks can be. Fourth, coverage risk — only one analyst contributes estimates, so earnings releases carry outsized volatility and price discovery is less efficient.
The 12-month scenario framework assigns a 55% probability to the base case of $100-$112, in which Toro hits the $5.88 consensus EPS and $5.39 billion revenue estimate, holds gross margin near 34%, and trades in a 17x-19x forward PE band while consolidating below the $108.84 high. The bull case carries 25% odds and a $118-$125 target, requiring operating margin to push from 10.89% TTM toward the 13%+ FY2022 peak and a re-rating to roughly 20x the $6.03 high-end EPS. The bear case carries 20% odds and an $87-$93 target, driven by a Professional-segment slowdown plus gross margin slipping toward 33%, forcing simultaneous EPS and multiple compression. The base case is most likely because the analyst's tight $5.80-$6.03 EPS range (about 4% wide) signals high near-term conviction with limited surprise potential in either direction. The key assumption behind the base case is that margin improvement continues gradually rather than stalling.
TTC looks fairly valued on most measures, with a modest tilt toward attractive on cash flow. The trailing PE of 23.5x sits in the middle of the stock's wide historical range — above the 12.9x trough in Q2 FY2025 but far below the 40x stress multiple in Q1 FY2025 — and the implied forward PE of about 17.8x on $5.88 of consensus EPS signals the market expects meaningful earnings growth. EV/EBITDA of 14.7x and PS of 1.65x are moderate for an industrial with a 21.75% ROE, and the 11.2x price-to-cash-flow ratio looks cheap given the 9.6% FCF yield. The 5.12x price-to-book is inflated by buybacks shrinking book equity rather than by an expensive revenue multiple. The market is essentially pricing a normalizing recovery, not euphoria — but after a 42% rally, the discount that existed at the June lows near $87 is gone. Verdict: fairly valued versus its own history, not undervalued.
The risk/reward is balanced rather than compelling at $104.84. On the positive side, TTC trades at roughly 17.8x the $5.88 consensus EPS versus a 23.5x trailing multiple, generates $711.5 million of TTM free cash flow (about a 9.6% FCF yield), and has posted three consecutive quarters of accelerating revenue growth culminating in 8.35% in Q3 FY2026 with net income up 44%. On the negative side, the stock sits at about 98% of its $108.84 52-week high after a 42.45% one-year gain, analyst sentiment is only neutral-to-mildly-positive (one Buy, two Neutral/Market Perform, one February 2026 downgrade), and no explicit consensus price target exists to quantify upside. The biggest downside risk is a Professional-segment demand slowdown combined with tariff-driven margin compression, which could send shares to the $87-$93 range — an 11% to 17% decline. It is a reasonable buy for long-horizon, total-return investors on a pullback toward the $96-$98 breakout zone, but at current levels it is better characterized as a Hold.
TTC is better suited to a long-term, total-return holding than to short-term trading. It is a mature industrial with a 2.03% dividend yield, a 47.8% payout ratio, a 21.75% ROE, and $711.5 million of TTM free cash flow — characteristics that reward patience rather than momentum chasing. The stock's -14.3% max drawdown over 180 days and its 42.45% one-year move imply above-market volatility, and with only one analyst covering estimates, earnings releases can produce outsized single-day swings that punish short-term positioning. The cyclical recovery is real but already largely reflected at $104.84, so near-term upside is capped by the $108.84 high while downside extends to the $87-$93 zone. A suggested minimum holding period is 12-18 months, long enough for the margin recovery toward the 13%+ FY2022 peak to either materialize or disappoint, and for buybacks to keep compounding per-share earnings.