Should you buy Toro Company (The) (TTC)?
Updated
Toro Company has achieved four consecutive earnings beats with excellent free cash flow conversion of 197% and a strong Piotroski score, but the stock offers only 5% upside to analyst targets and the reward-to-risk profile does not yet meet the bar for adding a new position.
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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Engine methodology range
Range computation requires sufficient peer-comparable data; available for tickers with peer_count ≥3.
What the engine is tracking
| Pillar | Expectation | Trend |
|---|---|---|
Toro converts 197% of net income into free cash flow, an exceptionally high ratio that indicates earnings quality is understated by GAAP figures and the business generates strong cash returns even in soft periods. Quality breakdown | Free cash flow conversion remains above 150% of net income over the next 12 months, demonstrating the durability of this cash generation advantage. | →Stable |
| CounterExtremely high FCF-to-net-income ratios can reflect one-time working capital timing rather than structural efficiency, and may normalize downward. | ||
The company has beaten analyst earnings estimates in each of the last four quarters with an average surprise of 6.8%, most recently reporting $1.60 against a $1.50 estimate, reflecting consistent execution and reliable forecasting. Earnings | The beat streak extends to at least 6 consecutive quarters, with average surprise remaining above 3%. | →Stable |
| CounterThe beat margin has been modest and narrowing, with the most recent surprise of only 6.7%, suggesting estimates are catching up and future beats may shrink. | ||
With the stock at $88.45 and analyst consensus targets implying a take-profit of $92.86, upside is only 5% while the stop loss sits at $82.43, yielding a reward-to-risk ratio of 0.74, which is below the minimum required for an attractive entry. Bear case | Analyst price targets rise above $100, expanding upside beyond 13% from the current price and improving the risk-reward profile. | →Stable |
| CounterAnalyst targets may lag price appreciation in cyclical industrials, and forward guidance upgrades could quickly reset the target higher. | ||
Toro converts 197% of net income into free cash flow, an exceptionally high ratio that indicates earnings quality is understated by GAAP figures and the business generates strong cash returns even in soft periods.
→Stable- Expectation
- Free cash flow conversion remains above 150% of net income over the next 12 months, demonstrating the durability of this cash generation advantage.
CounterExtremely high FCF-to-net-income ratios can reflect one-time working capital timing rather than structural efficiency, and may normalize downward.
The company has beaten analyst earnings estimates in each of the last four quarters with an average surprise of 6.8%, most recently reporting $1.60 against a $1.50 estimate, reflecting consistent execution and reliable forecasting.
→Stable- Expectation
- The beat streak extends to at least 6 consecutive quarters, with average surprise remaining above 3%.
CounterThe beat margin has been modest and narrowing, with the most recent surprise of only 6.7%, suggesting estimates are catching up and future beats may shrink.
With the stock at $88.45 and analyst consensus targets implying a take-profit of $92.86, upside is only 5% while the stop loss sits at $82.43, yielding a reward-to-risk ratio of 0.74, which is below the minimum required for an attractive entry.
→Stable- Expectation
- Analyst price targets rise above $100, expanding upside beyond 13% from the current price and improving the risk-reward profile.
CounterAnalyst targets may lag price appreciation in cyclical industrials, and forward guidance upgrades could quickly reset the target higher.
▸ Show 1 more pillar▾ Show fewer
Despite the stock trading above its 200-day moving average, on-balance volume has been falling, indicating that shares are quietly being distributed rather than accumulated, which can precede price weakness even when trend indicators look supportive.
→Stable- Expectation
- On-balance volume turns positive and the stock sustains volume accumulation for at least 8 consecutive weeks.
CounterLight seasonal volume in outdoor power equipment can temporarily depress OBV without signaling genuine institutional selling.
→ Full pillar scorecard with all 4 pillars + per-dimension breakdown
When this thesis breaks
Falsifiable conditions per pillar — any one trip warrants review independent of price action. Engine-derived; not personalized advice.
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Toro converts 197% of net income into free cash flow, an exceptionally high ratio that indicates earnings quality is understated by GAAP figures and the business generates strong cash returns even in soft periods.
Trip ifFree cash flow conversion falls below 100% of net income for at least 2 consecutive quarters.
- P2The company has beaten analyst earnings estimates in each of the last four quarters with an average surprise of 6.8%, most recently reporting $1.60 against a $1.50 estimate, reflecting consistent execution and reliable forecasting.
Trip ifEPS surprise falls below 0% in at least 2 of the next 4 quarters.
- P3With the stock at $88.45 and analyst consensus targets implying a take-profit of $92.86, upside is only 5% while the stop loss sits at $82.43, yielding a reward-to-risk ratio of 0.74, which is below the minimum required for an attractive entry.
Trip ifStock price drops below $82, more than 7% below the current $88.45, breaching the stop-loss level.
- P4Despite the stock trading above its 200-day moving average, on-balance volume has been falling, indicating that shares are quietly being distributed rather than accumulated, which can precede price weakness even when trend indicators look supportive.
Trip ifOn-balance volume declines by more than 15% from current levels over the next 3 months.
How the engine reached this verdict
TrendMatrix's engine output for Toro Company (The) (TTC) is SELL_IF_HOLDING with medium conviction, score 5.3/10 at $95.84. The F-path SELL output reflects an overall score of 5.3 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. Asymmetry R:R of -0.26 is supplementary context, not the trigger.
The dominant failed gate is reward-to-risk (NEGATIVE). SELL flips back toward HOLD if reward-to-risk recovers above its threshold AND a co-failing gate also clears. The strongest-cleared gate today is MOMENTUM:5.0>=4.5.
On the bull side: Strong earnings beat streak (4/4). On the bear side: Analyst target reached - limited upside remaining. Active engine warnings: V8: Target reached (-3.4% upside), V9 Gate Failed: ASYMMETRY:-0.3=NEGATIVE.
The engine's exit framework anchors to a tactical sell band near $95.84, with structural invalidation at $90.02. The asymmetric R:R against a reversal hypothesis is -0.32 — the upside scenario exists, but it requires multiple structural gates to flip; the downside scenario requires only one more disappointment. The engine's sizing output: 0.5% of portfolio at this asymmetry level (none-conviction tier).
For the full 10-dimension breakdown + V9 gate detail: Why TrendMatrix rates TTC — 10-dimension breakdown →
Bull case
- ▸Strong earnings beat streak (4/4)
Bear case
- ▸Analyst target reached - limited upside remaining