Toro Company: Insider Selling Versus Contrarian Buying – Is Now the Time to Bet on Long-Term Value?

Byline: June 19, 2025

Toro Company (NYSE: TTC), a leader in outdoor power equipment and irrigation systems, finds itself at a crossroads. Recent insider selling by key executives, including a notable $356,000 sale by Director Gary Lee Ellis, has raised eyebrows. Yet institutional investors like Wealthquest Corp are piling in, buying $3.7 million worth of shares. Amid mixed signals, investors must weigh near-term risks—driven by weakening demand and tariff headwinds—against the company's robust dividend yield, long-term growth prospects, and a stock price now trading below critical technical levels.

The Insider Sell-Off: Cause for Concern or Strategic Profit-Taking?

Gary Lee Ellis, a Toro director, has been a frequent seller of shares over the past two years, including a March 2024 sale of 5,192 shares at $88.75 and a June 2025 sale of 356,741 shares at $70.81. His total sales since late 2023 have netted over $25 million, suggesting a personal financial strategy or a cautious stance on near-term prospects.

However, Ellis also exercised options to buy shares at prices as low as $37.67, a move that implies confidence in the stock's long-term trajectory. This contrasts with CEO Richard M. Olson's June 2025 sale of 20,000 shares at $95.19, which occurred amid a sharp drop in the stock price from its 52-week high of $100.92. While such sales may spook short-term traders, executives' option exercises and equity compensation structures often incentivize strategic transactions rather than outright pessimism.

Institutional Buying: A Contrarian Signal or a Vote of Confidence?

While insiders have been selling, institutional investors are stepping in. Wealthquest Corp added $3.7 million to its stake in Q1 2025, making it Toro's 19th-largest holder. Other institutions, including Principal Securities and CIBC Asset Management, also increased their positions. This buying coincides with Toro's stock dipping below its 50-day moving average ($71.74) and 200-day average ($75.86), raising the question: Are these investors seeing value where others see risk?

The answer lies in Toro's fundamentals. Despite Q2 2025 revenue missing estimates due to lagging residential demand, the company maintained EPS growth and reaffirmed its dividend—a consistent $0.38 quarterly payout yielding 2.15%. Analysts note that Toro's professional equipment segment, which serves commercial landscapers and golf courses, is thriving, offsetting residential softness.

Valuation and Dividend: A Safety Net in Uncertain Times

At a P/E ratio of 18.1 and a market cap of $6.97 billion, Toro trades at a modest premium to its historical averages. Yet its dividend is a standout feature, with a payout ratio of 39%—comfortably covered by earnings. The stock's dividend yield, now among the highest in the outdoor equipment sector, may attract income-focused investors as rates rise.

Analysts' “Hold” consensus and a price target of $82.75 suggest skepticism about near-term catalysts but acknowledge underlying value. The current price of $70.33 represents a 17% discount to that target, a gap that could narrow if Toro's share repurchases ($200 million year-to-date) and autonomous technology initiatives gain traction.

Technical Picture: A Bearish Trend or Oversold Opportunity?

Toro's stock has been in a clear downtrend since early 2025, with the 50-day moving average now below the 200-day—a classic “death cross.” The stock closed at $70.33 on June 19, 2025, near its 52-week low of $62.34.

Technically, the RSI (14) has dipped into oversold territory (below 30), while the MACD line remains negative but narrowing—a sign of weakening downward momentum. However, historical backtests show that buying on a Death Cross has led to a 5.8% decline over six months, with a maximum drawdown of 11.3%, suggesting caution for contrarian investors. Bulls might argue that the stock has priced in near-term risks, making the current level a buying opportunity. Bears, however, note that the 200-day moving average has failed as support, leaving $62.34 as the next critical test.

Conclusion: Near-Term Risks vs. Long-Term Value

Toro's challenges—tariff-driven cost pressures, soft residential sales—are real but not existential. Its professional segment's resilience, dividend strength, and institutional buying suggest the stock could rebound if macro conditions stabilize.

Investment Takeaway:
- Bull Case: Buy Toro at current levels for a 17% upside to analyst targets, focusing on the dividend and potential rebound in residential demand post-tariff relief.
- Bear Case: Avoid until the stock recovers above its 50-day moving average ($71.74) or signs of revenue stabilization emerge.

The near-term risks are clear, but for investors with a multi-year horizon, the dip below key technical levels may present a contrarian opportunity to lock in a 2.15% yield and bet on Toro's long-standing dominance in a fragmented market. However, historical performance of Death Cross events—such as the 5.8% average loss over six months—cautions against overconfidence in contrarian signals.

This article is for informational purposes only and should not be construed as financial advice.