Value
4.6/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 4.5 |
| EV/EBITDA | 2.7 |
| Fwd P/E | 6.6 |
| PEG | 4.4 |
| Analyst target | 5.0 |
- ▸Forward P/E: 19.6x
- ▸PEG: 2.06
TTC · Why this verdict
Why Toro Company (The) (TTC) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictBUY WAIT
Overall score5.4/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
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.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| 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%. | ↑Improving |
| 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. | ||
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. Momentum breakdown | On-balance volume turns positive and the stock sustains volume accumulation for at least 8 consecutive weeks. | ↓Deteriorating |
| CounterLight seasonal volume in outdoor power equipment can temporarily depress OBV without signaling genuine institutional selling. | ||
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.
→StableQuality breakdown
- 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.
↑ImprovingEarnings
- 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.
→StableBear case
- 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.
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.
↓DeterioratingMomentum breakdown
- 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.
Per-dimension breakdown
Quality
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 8.0 |
| ROA | 5.8 |
| Gross margin | 2.7 |
| Op margin | 5.8 |
| Net margin | 3.6 |
| Current ratio | 5.7 |
| FCF quality | 10.0 |
| Moat | 5.4 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 197% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 8/9
Growth
4.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.5 |
| EPS growth | 3.9 |
Momentum
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 8.3 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 4.0 |
| Volume | 10.0 |
| vol acceleration | 2.3 |
- ▸Uptrend pullback (RSI 32) - buy opportunity
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
- ▸Volume surge (2.7x avg) on selloff
Sentiment
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| news sentiment | 10.0 |
| Analyst rating | 6.3 |
| Price target | 7.5 |
- ▸Positive news sentiment (+1.00)
- ▸Light analyst coverage (4.0) — signal dampened
Insider
4.5/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| holder change | 4.6 |
- ▸Share-count fallback (no $ value): net -13,551.0 shares
Peer rank
3.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.8 |
| quality rank | 5.6 |
| growth rank | 3.8 |
Technical
8.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 10.0 |
| support resistance | 8.8 |
| 52w position | 7.7 |
Risk (lower is worse)
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.6 |
| days to cover | 3.6 |
| volatility | 5.4 |
| put call | 10.0 |
| implied vol | 5.7 |
| beta | 8.8 |
| debt equity | 6.0 |
Catalyst
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 5.9 |
| dividend safety | 7.0 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 0 days
How the verdict was assembled
Engine trigger
Earnings in 0 days. Wait until post-earnings.
Engine technical detail
verdict_path:
L3:NEWS_BLOCK|ENTRY_STICKY:WITHIN_BANDPassed (5)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:4.3<4.5
- ASYMMETRY:0.1<1.5@spot
- EARNINGS_PROXIMITY:0d<=7d
Warning (0)
none
Reward-to-Risk
0.09
Upside
+0.5%
Downside
5.7%
Sizing output
STARTER
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
A recent news event triggered an L3 news-block on the verdict path. Trigger: Earnings in 0 days. Wait until post-earnings. The 10-dimension scores remain Technical at 8.8 (strongest), but MOMENTUM:4.3<4.5 also fails — the news block is the proximate trigger, not the sole driver.
The strongest dimensions are Technical at 8.8, Sentiment at 7.7, and Catalyst at 6.8; the weakest are Peer rank at 3.3, Growth at 4.2, and Momentum at 4.3. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of 0.09 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Free Cash Flow Conversion
Trip ifFree cash flow conversion falls below 100% of net income for at least 2 consecutive quarters.
- P2Earnings Beat Streak
Trip ifEPS surprise falls below 0% in at least 2 of the next 4 quarters.
- P3Thin Upside Asymmetry
Trip ifStock price drops below $82, more than 7% below the current $88.45, breaching the stop-loss level.
- P4Volume Distribution Caution
Trip ifOn-balance volume declines by more than 15% from current levels over the next 3 months.