The Toro Co (TTC, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at 83.14, The Toro Co has witnessed a surge of 0.97% over a period, marked against a three-month change of -14.39%. A thorough analysis, underlined by the GuruFocus Score Rating, suggests that The Toro Co is well-positioned for substantial growth in the near future.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Here is a breakdown of The Toro Co's GF Score:
- 1. Financial strength rank: 7/10
- 2. Profitability rank: 9/10
- 3. Growth rank: 10/10
- 4. GF Value rank: 10/10
- 5. Momentum rank: 8/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With a high rank in growth and GF value, and a slightly lower rank in financial strength, GuruFocus assigned The Toro Co the GF Score of 97 out of 100, which signals the highest outperformance potential.
Understanding The Toro Co's Business
The Toro Co, with a market cap of $8.63 billion and sales of $4.74 billion, is a leading manufacturer of turf maintenance and landscaping equipment. The company's operating margin stands at 13.45%. The Toro Co produces a wide range of products, including reel and rotary riding products, trim cutting and walking mowers, greens rollers, turf sprayer equipment, underground irrigation systems, heavy-duty walk-behind mowers, and sprinkler systems. These products are primarily marketed to professional users maintaining turfs and sports fields such as golf courses. The company also produces snow plowers and ice management products, with the United States being its largest end market.
Financial Strength Breakdown
According to the Financial Strength rating, The Toro Co's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for The Toro Co stands impressively at 11.53, underscoring its strong capability to cover its interest obligations. With an Altman Z-Score of 5.05, The Toro Co exhibits a strong defense against financial distress. With a favorable Debt-to-Revenue ratio of 0.25, The Toro Co's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows The Toro Co's impressive standing among its peers in generating profit. The Toro Co's strong Predictability Rank of 4.5 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, The Toro Co demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 13.8%, which outperforms better than 69.94% of 2678 companies in the Industrial Products industry. Moreover, The Toro Co has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 17.6, and the rate over the past five years is 11.4. This trend accentuates the company's continued capability to drive growth.
Conclusion
Given The Toro Co's strong financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential outperformance. This analysis underscores the importance of comprehensive financial evaluation in identifying companies with robust growth potential and market leadership. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
