Toro Co. Faces Valuation Shift Amidst Flat Financial Performance and High Institutional Holdings

The Toro Co., a small-cap player in the automobiles industry, has recently undergone an adjustment in its evaluation. This revision reflects a shift in the company's valuation grade, now categorized as expensive. Key financial metrics reveal a P/E ratio of 21, alongside a price-to-book value of 5.63. The enterprise value to EBITDA stands at 14.54, while the EV to EBIT is recorded at 18.32.
The company showcases a robust return on capital employed (ROCE) of 20.90% and a return on equity (ROE) of 27.25%, indicating strong management efficiency. Additionally, Toro's ability to service debt is highlighted by a low debt to EBITDA ratio of 1.17 times. However, the company has experienced flat financial performance in the quarter ending July 2025, with a debtor turnover ratio at its lowest of 8.99 times.

Despite a return of -8.79% over the past year and a profit decline of 4.7%, Toro maintains high institutional holdings at 99.79%, suggesting a strong analytical backing from larger investors. The stock's performance has consistently lagged behind the S&P 500 over the last three years.

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