| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 56.96 | -38 |
| Intrinsic value (DCF) | 30.48 | -67 |
| Graham-Dodd Method | 9.19 | -90 |
| Graham Formula | 35.13 | -62 |
The Toro Company (NYSE: TTC) is a leading global manufacturer of professional and residential turf, landscape, and snow/ice management equipment. Founded in 1914 and headquartered in Bloomington, Minnesota, Toro operates through two key segments: Professional and Residential. The Professional segment serves golf courses, sports fields, municipalities, and agricultural sectors with high-performance mowing, irrigation, and snow removal equipment. The Residential segment caters to homeowners with a broad portfolio of lawn mowers, snow throwers, and outdoor power tools. Toro distributes its products through an extensive network of dealers, distributors, and retailers, including home centers and online platforms. With a market cap of ~$7.4B, Toro is a dominant player in the industrials sector, known for innovation in sustainable landscaping and precision irrigation. Its strong brand reputation and diversified product lineup position it well in the $100B+ global outdoor power equipment market.
Toro presents a compelling investment case with its market leadership in niche outdoor equipment segments, consistent dividend payments (current yield ~1.5%), and strong free cash flow generation (~$466M in FY2023). The company benefits from recurring revenue streams through parts/accessories (30% of sales) and demonstrates pricing power with premium professional-grade equipment. However, risks include cyclical exposure to residential DIY demand (35% of revenue), supply chain vulnerabilities in steel/electronics, and increasing competition from private-label brands. With a beta of 0.83, Toro offers relative stability within industrials, though investors should monitor inventory levels (days inventory rose to 134 in 2023) and debt/EBITDA leverage (2.3x).
Toro maintains competitive advantages through: 1) Technological leadership in smart irrigation (via acquisitions like Irritrol) and autonomous mowing (Toro MyMow), 2) Strong professional customer stickiness with golf course operators (60% market share in greens mowers) and municipalities, 3) Dual-channel distribution combining specialized dealers for professionals with mass retail for consumers. The company differentiates through durability-focused engineering (Dingo compact utility loaders) and integrated solutions like its Lynx smart irrigation system. However, it faces pressure from Deere's scale in agricultural turf and Husqvarna's broader consumer product range. Toro's focus on higher-margin professional equipment (60% of revenue) provides better margins (9.4% operating margin) than pure-play residential competitors. Recent strategic shifts toward electrification (60+ battery products) and water-efficient irrigation position it well for sustainability trends, though adoption cycles remain gradual in professional markets.