Activist company

Toro Company (NYSE:TTC) one-year yields climbed after last week’s 4.7% gain, institutional investors must be pleased

If you want to know who actually controls The Toro Company (NYSE: TTC), you’ll need to look at the composition of its share register. The group with the largest number of shares in the company, around 83% to be precise, are institutions. In other words, the group is likely to gain the most (or lose the most) from its investment in the business.

And as a result, institutional investors reaped the most rewards after the company’s share price gained 4.7% last week. Last week’s gains would have further boosted the one-year return to shareholders, which currently stands at 2.1%.

In the chart below, we zoom in on Toro’s different ownership groups.

Check out our latest analysis for Toro

NYSE: TTC Ownership Allocation on October 26, 2022

What does institutional ownership tell us about Toro?

Institutional investors typically compare their own returns to the returns of a commonly tracked index. They therefore generally consider buying larger companies that are included in the relevant benchmark.

We can see that Toro has institutional investors; and they own a good part of the shares of the company. This implies that analysts working for these institutions have reviewed the stock and like it. But like everyone else, they can be wrong. It is not uncommon to see a sharp decline in the stock price if two large institutional investors attempt to sell a stock at the same time. So it’s worth checking out Toro’s past earnings trajectory (below). Of course, keep in mind that there are other factors to consider as well.

earnings-and-revenue-growth
NYSE: TTC Earnings and Revenue Growth October 26, 2022

Since institutional investors own more than half of the issued shares, the board will likely have to pay attention to their preferences. It appears that hedge funds own 5.8% of Toro shares. This is interesting because hedge funds can be very active and militant. Many are looking for medium-term catalysts that will drive the stock price higher. Our data shows The Vanguard Group, Inc. is the largest shareholder with 9.9% of shares outstanding. For context, the second shareholder owns approximately 8.6% of the outstanding shares, followed by a 5.8% ownership by the third shareholder.

Looking at the shareholder register, we can see that 51% of the ownership is controlled by the 12 major shareholders, which means that no shareholder has a controlling interest in the ownership.

While it makes sense to study data on a company’s institutional ownership, it also makes sense to study analyst sentiment to find out which way the wind is blowing. A number of analysts cover the stock, so you can look at growth forecasts quite easily.

Toro Insider Ownership

The definition of an insider may differ slightly from country to country, but board members still matter. The management of the company runs the company, but the CEO will answer to the board of directors, even if he is a member of it.

Insider ownership is positive when it signals that executives think like the true owners of the company. However, strong insider ownership can also give immense power to a small group within the company. This can be negative in certain circumstances.

Our most recent data indicates that insiders own less than 1% of The Toro Company. Being so large, we wouldn’t expect insiders to own a large portion of the shares. Together they own $41 million worth of stock. In this kind of situation, it may be more interesting to see whether these insiders have been buying or selling.

General public property

The general public, including retail investors, owns 10% of the company’s capital and therefore cannot be easily ignored. This size of ownership, although considerable, may not be sufficient to change company policy if the decision is not in line with other major shareholders.

Next steps:

I find it very interesting to see who exactly owns a business. But to really get insight, we also need to consider other information. Consider the risks, for example. Every business has them, and we’ve spotted 2 warning signs for Toro you should know.

If you prefer to find out what analysts are predicting in terms of future growth, don’t miss this free analyst forecast report.

NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month the financial statements are dated. This may not be consistent with the annual report figures for the full year.

Valuation is complex, but we help make it simple.

Find out if Toro is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.