TTC – Market expectations are for Uniform ROA to compress, but management is confident about the Revolution product line, capacity, and shareholder returns

May 5, 2022

  • The Toro Company (TTC) currently trades below corporate, yet near historical averages relative to Uniform earnings, with an 18.5x Uniform P/E (Fwd. V/E’).

  • At these levels, markets are pricing in expectations for Uniform ROA to compress to 20%, accompanied by 3% Uniform asset growth.

  • Meanwhile, analysts expect Uniform ROA to remain stable at 24% levels through 2023, accompanied by 8% Uniform asset growth.

  • If sustained going forward, these levels would imply a stock price closer to $126, representing significant potential equity upside for the firm.

  • Moreover, the firm’s most recent earnings call suggests management is confident about the Revolution product line, capacity, and shareholder returns.

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