Toro Company (The) Common Stock (TTC) fair value

ACCE thesis

The Toro Company makes professional and residential turf equipment, including mowers, snow throwers, irrigation systems and landscape products sold through dealers and home centers, with its Exmark and Toro brands serving commercial landscapers and golf course operators. Its moat rests on a dealer network and service footprint that commercial customers are reluctant to switch away from, and on a residential franchise that has been gaining share at major retailers. Revenue growth of 8.4% is the most visible sign that the model is still compounding, with the market now paying 17.0x forward earnings against 27.0x trailing, which implies earnings are expected to recover strongly from a depressed base. A return on equity of 26.5% alongside a 14.0% operating margin says the business earns well on the capital it uses, though the 33.5% gross margin leaves less room for error if input costs or residential demand turn. At roughly $9.5B in market cap, it sits outside major indices, which is worth remembering when judging how the stock trades relative to its fundamentals.