The Toro (NYSE:TTC) and Terex (NYSE:TEX) are both consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, risk, earnings and valuation.
Profitability
This table compares The Toro and Terex's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
The Toro | 9.76% | 32.24% | 11.95% |
Terex | -0.12% | 2.35% | 0.66% |
Insider and Institutional Ownership
80.5% of The Toro shares are owned by institutional investors. Comparatively, 83.8% of Terex shares are owned by institutional investors. 1.8% of The Toro shares are owned by insiders. Comparatively, 3.7% of Terex shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Dividends
The Toro pays an annual dividend of $1.05 per share and has a dividend yield of 1.0%. Terex pays an annual dividend of $0.48 per share and has a dividend yield of 1.0%. The Toro pays out 34.8% of its earnings in the form of a dividend. Terex pays out 14.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. The Toro has increased its dividend for 1 consecutive years and Terex has increased its dividend for 1 consecutive years. Terex is clearly the better dividend stock, given its higher yield and lower payout ratio.
Valuation and Earnings
This table compares The Toro and Terex's top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
The Toro | $3.38 billion | 3.39 | $329.70 million | $3.02 | 35.26 |
Terex | $4.35 billion | 0.73 | $54.40 million | $3.25 | 14.09 |
The Toro has higher earnings, but lower revenue than Terex. Terex is trading at a lower price-to-earnings ratio than The Toro, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
The Toro has a beta of 0.73, meaning that its stock price is 27% less volatile than the S&P 500. Comparatively, Terex has a beta of 1.55, meaning that its stock price is 55% more volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of recent ratings and price targets for The Toro and Terex, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
The Toro | 0 | 4 | 1 | 0 | 2.20 |
Terex | 1 | 9 | 8 | 0 | 2.39 |
The Toro currently has a consensus target price of $95.00, indicating a potential downside of 10.58%. Terex has a consensus target price of $37.3125, indicating a potential downside of 18.42%. Given The Toro's higher possible upside, equities analysts plainly believe The Toro is more favorable than Terex.
Summary
Terex beats The Toro on 9 of the 16 factors compared between the two stocks.