Value
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.6 |
| P/S | 9.0 |
| EV/EBITDA | 2.9 |
| Fwd P/E | 6.7 |
| PEG | 4.5 |
| Analyst target | 4.0 |
- ▸Forward P/E: 19.2x
- ▸PEG: 2.02
TTC · Why this verdict
Why Toro Company (The) (TTC) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.3/10
ConfidenceMEDIUM
MacroNEUTRAL
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%. | →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. | ||
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. | →Stable |
| 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.
→StableEarnings
- 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.
→StableMomentum 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.
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.
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
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 6.8 |
| erm sentiment | 5.0 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Insider selling (low materiality) — $1,256,266 (0.014% of mkt cap)
Peer rank
5.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.0 |
| quality rank | 6.3 |
| growth rank | 5.0 |
Technical
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.8 |
| support resistance | 0.7 |
| 52w position | 8.6 |
Risk (lower is worse)
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.0 |
| days to cover | 6.6 |
| volatility | 5.4 |
| put call | 10.0 |
| implied vol | 8.0 |
| beta | 8.9 |
| debt equity | 6.0 |
Catalyst
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 5.9 |
| dividend safety | 6.0 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 161.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:5.0>=4.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:61d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.3=NEGATIVE
Warning (1)
- MOMENTUM:5.0<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
-0.32
Upside
-4.3%
Downside
13.6%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 66, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
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. The strongest dimension ( Risk (lower is worse) at 7.4) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.3=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.32 — supplementary context, not the trigger for this path.
The strongest dimensions are Risk (lower is worse) at 7.4, Catalyst at 6.4, and Quality at 6.2; the weakest are Technical at 3.7, Growth at 4.2, and Insider at 5.0. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.32 and an engine sizing output of AVOID.
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.