THE TORO COMPANY (TTC): what the price assumes

In the published model solve dated 2026-Q2, anchored at $99.03, THE TORO COMPANY (TTC) is priced for +17.7% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-11.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/TTC

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 8.7% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.4%); the inversion above states its own rate.

Per-Model Detail (n=12)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• Toro is a two-segment outdoor-equipment maker weighted heavily toward the professional side, which the FY2025 10-K puts at 80.3 percent of consolidated sales (accession 0000737758-25-000115), spanning golf, grounds, landscape, and underground construction gear, with a smaller residential mower and snowblower line.
• The distinctive current story is a margin transformation: the AMP productivity program is on track for $125 million of run-rate savings by fiscal year-end, and Q2 FY2026 professional-segment margin reached 20.3 percent as adjusted EPS grew 12.7 percent.
• The near-term risk is tariffs, management raised its gross fiscal-2026 tariff estimate to about $120 million, and the watch item is whether AMP savings and price increases keep offsetting them into the raised full-year adjusted EPS guide of $4.50 to $4.62.

Bull Case

The strongest structural advantage here is a professional franchise with real switching costs and end markets that are quietly attractive. The FY2025 10-K shows the professional segment at 80.3 percent of consolidated sales (accession 0000737758-25-000115), and it is not a commodity equipment business: Toro sells to golf courses, municipal grounds crews, landscape contractors, and underground-construction fleets who buy on reliability, dealer support, and parts availability, then stay for the service relationship. Those end markets are riding tailwinds a buyer would want, healthy golf demand, and, notably, data center-driven fiber and infrastructure deployment feeding the underground-construction line. Q2 FY2026 professional sales reached $1,106.6 million at a 20.3 percent margin, the kind of margin that says pricing power, not commodity competition.

The margin story is the active catalyst, and it is company-driven rather than cycle-dependent. The AMP program, which the 10-K describes as "a multi-year initiative intended to result in annualized cost savings of more than $100 million by fiscal 2027" through supply-base, design-to-value, route-to-market, and operational changes (accession 0000737758-25-000093), is now tracking to $125 million of run-rate savings by year-end. Its fingerprints are on the numbers: operating margin jumped to 13.7 percent in the May quarter from single digits a year earlier, and the residential segment nearly doubled earnings to $30.3 million on modest sales growth. Because AMP is a cost program, its savings drop toward the bottom line regardless of what the top line does, which is why management raised full-year adjusted EPS guidance to $4.50 to $4.62 even in a soft-demand environment.

The cash and capital-return profile seals the case. Free cash flow converted at 223 percent of net income over the trailing year, an unusually high figure that reflects both strong collections and working-capital discipline, and Toro returned $525.7 million to shareholders, $150.6 million in dividends and $375.1 million in buybacks equal to 110 percent of net income, while shrinking the share count. Return on equity is 24.8 percent and the balance sheet sits deep in the safe zone. A professional-weighted franchise with pricing power, a self-help margin program with two years left to run, and management buying back more stock than it earns is a compounder doing exactly what compounders do, and analysts see room, pointing to a double-digit gap to their price targets.

Bear Case

The advantage that could erode fastest is the one the professional franchise leans on: pricing power in end markets that are more cyclical and weather-dependent than the current numbers admit. Toro's top line actually shrank in fiscal 2025, with the 10-K reporting "Consolidated net sales for fiscal 2025 were $4,510.4 million, a decrease of 1.6 percent" (accession 0000737758-25-000115), so the earnings growth investors are paying for has come almost entirely from AMP cost savings and margin, not from unit demand. That is a finite lever. AMP tops out around $125 million of run-rate savings by fiscal 2027, and once it is fully captured, growth has to come from volume again, in end markets the 10-K itself flags as exposed: it warns of "slowdowns or reductions in levels of interest in the game of golf or golf course activity" and of reduced infrastructure and municipal spending (accession 0000737758-25-000032). Golf demand is strong now; it has cycled hard before.

Weather and seasonality are structural erosion risks that never fully go away. The 10-K is explicit that "Weather conditions in particular geographic regions have adversely impacted, and will likely in the future, adversely affect the sales, demand, and field inventory levels and seasonality trends of some of our products" (accession 0000737758-25-000115), and it adds that climate-driven weather events can both depress demand and disrupt Toro's own manufacturing and distribution. A light snow season hurts the residential snow line; a drought shifts irrigation demand; an early or late spring moves an entire selling window. These are not tail risks for an outdoor-equipment maker; they are the recurring texture of the business, and they make any single quarter's beat a noisy signal.

The most immediate pressure is tariffs, and it is large relative to earnings. Toro raised its gross fiscal-2026 tariff estimate to about $120 million, against roughly $20 million of expected refunds, and the 10-K confirms the company "expects to continue to incur, additional costs as it relates to tariffs" that it is mitigating through price increases and sourcing changes (accession 0000737758-25-000056). Price increases into soft demand risk volume; sourcing changes take time. Now weigh that against the price. At 27 times trailing earnings and 22 times EBITDA against machinery-sector medians of 18 and 12, only the growth-DCF method reaches the price, every static frame, asset value, earnings power, peer multiples, reads the stock as richly valued. The price implies about 11 percent annual operating growth for five years, which the company has delivered recently but mostly via a cost program that is two-thirds done. If AMP finishes and volume growth does not take the baton, or if tariffs outrun the price increases, the durability premium the market is paying compresses toward what the static methods say the business is actually worth.

Valuation

At $93.20 (July 2026), the market pays about 19 times company-wide operating income, which inverts to an assumption of roughly 11 percent annual operating growth for five years. That pace is within what Toro has recently delivered, so the stretch is duration rather than rate; only about half of comparable fast-growers sustained this level for five years. Notably, the price does not require margin expansion, the framework's value band implies a roughly 6.4 percent operating margin would justify the price against the 9.4 percent Toro earns today, so this is explicitly a growth-and-longevity bet on a business already earning more than the price demands on margin.

The valuation methods land in the classic quality-compounder pattern: only the growth-DCF reaches the price, while the asset-based, earnings-power, and peer-multiple methods all read it as richly valued. That spread is the durability premium, the market paying for compounding the static frames structurally cannot capture. The trailing multiples quantify it, about 27 times earnings and 22 times EBITDA against machinery-sector medians of 18 and 12, and the honest tension is that the recent earnings growth has been powered by the AMP cost program rather than by volume: the 10-K notes fiscal 2025 sales fell 1.6 percent (accession 0000737758-25-000115), so the premium is a bet that self-help margin gains plus an eventual volume recovery combine to sustain the implied growth.

The cash generation is what makes the premium defensible rather than speculative. Free cash flow converted at 223 percent of net income over the trailing year, a 44.6 percent dividend payout leaves room, and buybacks ran at 110 percent of net income while the share count fell. Leverage sits deep in the safe zone. The concrete thing that has to be true at this price is that Toro converts its AMP savings (tracking to $125 million run-rate by fiscal 2027) into durable margin while professional end markets, golf, grounds, and the data-center-fed underground-construction line, provide enough volume growth to carry the implied 11 percent operating compounding after the cost program is fully banked. If tariffs (about $120 million gross this year) outrun price increases, or golf and infrastructure demand soften, the static methods' verdict, richly valued, becomes the one that governs. The balance sheet ensures survival is never the question; durability of the compounding is.

Catalysts

The recent catalyst was a strong Q2 fiscal 2026 (quarter ended May 1, 2026) that lifted guidance. Net sales rose 8.1 percent to $1.42 billion, reported EPS grew 9.5 percent to $1.50 and adjusted EPS 12.7 percent to $1.60, with professional sales of $1,106.6 million at a 20.3 percent margin and residential earnings nearly doubling to $30.3 million. Management raised full-year fiscal 2026 guidance to 4.0 to 6.5 percent sales growth and adjusted EPS of $4.50 to $4.62, with the professional segment now guided to 5 to 7 percent growth and residential to about flat. The next scheduled event is the fiscal Q3 report, where the questions are whether professional margin holds near 20 percent and whether the AMP savings continue to flow.

The AMP productivity program is the strategic thread with a defined finish line: management now expects $125 million of run-rate savings by fiscal year-end, and the 10-K frames the multi-year target at more than $100 million by fiscal 2027 through supply-base, design-to-value, and route-to-market changes (accession 0000737758-25-000093). Each quarter's margin bridge is effectively an AMP progress report. The offsetting variable is tariffs: Toro raised its gross fiscal-2026 tariff estimate to about $120 million, expects roughly $20 million in refunds, and is mitigating through price increases and sourcing shifts, so the interplay between tariff drag and price realization is the margin swing factor for the back half.

Two demand threads are worth tracking. The professional segment is being propelled by infrastructure upgrades and data center-driven fiber deployment feeding the underground-construction line, plus healthy golf-market demand, and any change in those end markets moves the volume outlook that the post-AMP growth story depends on. Weather remains the recurring wildcard for the residential snow-and-irrigation lines. Analyst sentiment leans constructive, with commentary pointing to a double-digit gap between the recent price and modeled price targets, so the setup rewards continued margin execution and would punish any sign the volume recovery is stalling.

Peer Cohorts (Per Segment, With Filing Citations)

Professional (reported)

• DE (DEERE & CO)
• FY2025 10-K: …domestically or internationally, manage increased costs of production, absorb or pass on increased pricing, and accurately predict financial results and industry trends ● availability and price of raw materials, components, and whole goods ● delays or disruptions in our supply chain ● changes in climate patterns,…
• FY2025 10-K: 03; - Senior Vice President and Chief Financial Officer (2019) Jahmy J. Hindman (50) ​ Senior Vice President and Chief Technology Officer (2023) ​ - Chief Technology Officer (2020) Rajesh Kalathur (57) ​ President, John Deere Financial, and Chief Information Officer (2022) ​ - President, John Deere Financial and…
• AGCO (AGCO CORP /DE)
• FY2025 10-K: …When practical, this translation impact is reduced by financing local operations with local borrowings. Our hedging policy prohibits use of foreign currency contracts for speculative trading purposes. The total notional value of our foreign currency instruments was $3,676.5 million and $4,187.9 million, including…
• FY2025 10-K: …agco:InterestAccrualOptionTwoMember agco:MultiCurrencyRevolvingCreditFacilityMember srt:MinimumMember us-gaap:LineOfCreditMember 2025-01-01 2025-12-31 0000880266 us-gaap:SecuredOvernightFinancingRateSofrMember agco:InterestAccrualOptionTwoMember agco:MultiCurrencyRevolvingCreditFacilityMember srt:MaximumMember…
• CNH (CNH INDUSTRIAL N.V.)
• FY2025 10-K: ), Global Finance Business Partner for CNH Financial Services (2011-2021) Stefano Pampalone (58) Agriculture Chief Commercial Officer (2024) President, Construction at CNH (2019-2024) Britton Worthen (52) Chief Legal and Compliance Officer (2025) Chief Legal Officer at Nikola Corporation (2015-2025) Jay Schroeder (55)…
• FY2025 10-K: …2025-12-31 0001567094 cnhi:DealerNetworksMember 2024-12-31 0001567094 srt:MinimumMember cnhi:PatentsConcessionsLicensesAndOtherMember 2025-12-31 0001567094 srt:MaximumMember cnhi:PatentsConcessionsLicensesAndOtherMember 2025-12-31 0001567094 cnhi:PatentsConcessionsLicensesAndOtherMember 2025-12-31 0001567094…
• ALG (ALAMO GROUP INC.)
• FY2025 10-K: …equipment for Santa Izabel Mukwonago, Wisconsin* 171,000 Owned Truck-Mounted Vacuum Trucks for Super Products Salford Priors, England* 168,000 Owned Tractor-Mounted Power Arm Flails and other Equipment for Bomford and Twose and Spearhead Ludlow, England* 167,000 Owned Hydraulic Boom-Mounted Hedge and Grass Cutters…
• FY2025 10-K: …the monitoring and detecting of cybersecurity incidents and executing our cybersecurity incident response plans. Members of our IT team have undergraduate and graduate degrees in relevant fields, including information systems, information assurance, and information technology with a concentration in cybersecurity.…
• GGG (GRACO INC.)
• FY2025 10-K: …Our reward programs connect all employees to the performance and success of the Company. As an employer of choice, we offer pay, benefits and a work environment that attracts and retains high-performing talent. We believe that an effective compensation program must be market competitive as well as fair and equitable.…
• FY2025 10-K: …has been recast to conform to the current organizational structure. The Company has four operating segments which are aggregated into three reportable segments: Contractor, Industrial and Expansion Markets. The Contractor segment markets sprayers and equipment that apply paint to walls and other structures, texture…
• TEX (Terex Corporation)
• FY2025 10-K: …2023-01-01 2023-12-31 0000097216 us-gaap:OperatingSegmentsMember tex:MaterialsProcessingEquipmentMember tex:AerialsSegmentMember 2023-01-01 2023-12-31 0000097216 tex:CorporateReconcilingItemsAndEliminationsMember tex:MaterialsProcessingEquipmentMember 2023-01-01 2023-12-31 0000097216…
• FY2025 10-K: …team members. We rely on the management and leadership skills of our senior management team, particularly those of the Chief Executive Officer. Additionally, certain key employees have extensive experience in our markets and are familiar with our business, systems and processes. The loss of the services of key…

Residential (reported)

• SWK (STANLEY BLACK & DECKER, INC.)
• FY2025 10-K: …have an inability to meet financial obligations. Second, a reserve is determined for all customers based on a range of percentages applied to aging categories. These percentages are based on historical collection rates, write-off experience, and forecasts of future economic conditions. Actual write-offs are charged…
• FY2025 10-K: …2024-12-29 2026-01-03 0000093556 swk:HomeDepotMember us-gaap:CustomerConcentrationRiskMember us-gaap:RevenueFromContractWithCustomerMember 2023-12-31 2024-12-28 0000093556 swk:HomeDepotMember us-gaap:CustomerConcentrationRiskMember us-gaap:RevenueFromContractWithCustomerMember 2023-01-01 2023-12-30 0000093556…
• AOS (A. O. Smith Corporation)
• FY2025 10-K: …customers important to our business. We cannot assure that we will be able to retain our largest customers. Some of our customers may shift their purchases to our competitors in the future. Our customers may experience financial instability, affecting their ability to make or pay for future purchases. Further, a…
• FY2025 10-K: …lines of residential and commercial gas and electric water heaters, boilers, heat pumps, tanks and water treatment products. Both segments primarily manufacture and market in their respective regions of the world. Our Rest of World segment is primarily comprised of China, India, and Europe. NORTH AMERICA Sales in our…
• GGG (GRACO INC.)
• FY2025 10-K: …has been recast to conform to the current organizational structure. The Company has four operating segments which are aggregated into three reportable segments: Contractor, Industrial and Expansion Markets. The Contractor segment markets sprayers and equipment that apply paint to walls and other structures, texture…
• FY2025 10-K: …us-gaap:FairValueInputsLevel1Member us-gaap:PensionPlansDefinedBenefitMember us-gaap:DefinedBenefitPlanCashAndCashEquivalentsMember 2025-12-26 0000042888 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:PensionPlansDefinedBenefitMember…
• ALG (ALAMO GROUP INC.)
• FY2025 10-K: …for trade names and trademarks, $ 68.0 million for customer and dealer relationships, $ 18.6 million for patents and drawings, and $ 3.7 million for favorable leasehold interests. The Company estimates amortization expense to be $ 16.2 million for each of the next five years. Indefinite-lived trade names and…
• FY2025 10-K: …goodwill. Intangible Assets The Company has intangible assets with both definite and indefinite useful lives. The definite-lived assets are trade names and trademarks, customer and dealer relationships, and patents and drawings that are subject to amortization with useful lives ranging from 3 years to 25 years.…
• SPB (Spectrum Brands Holdings, Inc.)
• FY2025 10-K: …haircut kits. Kitchen & Home Appliances: Black+Decker®, Russell Hobbs®, Emeril Legasse®, PowerXL®, Goerge Forman®, Copper Chef ®, Breadman®, and Juiceman®. Personal Care: Remington®. All brands and tradenames are owned by the Company, with the exception of Black+Decker® ("B+D") and Emeril Legasse® ("Emeril") which…
• FY2025 10-K: …greater than 10% of consolidated or segments sales. We own the right to use the Remington® trademark for personal care products through the terms of an agreement between a wholly-owned subsidiary of the Company, Remington Products, LLC, and a separate third party, Remington Arms Company, Inc., which provides shared…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.