Contrasting ESAB (NYSE:ESAB) and Toro (NYSE:TTC)

Toro (NYSE:TTC) and ESAB (NYSE:ESAB) are both mid-cap industrials companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, profitability, earnings, institutional ownership, risk, dividends and valuation.

Analyst Ratings

This is a summary of current ratings for Toro and ESAB, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Toro	0	4	2	0	2.33
ESAB	0	1	7	0	2.88

Toro currently has a consensus price target of $111.67, indicating a potential upside of 15.14%. ESAB has a consensus price target of $129.86, indicating a potential upside of 101.21%. Given ESAB’s stronger consensus rating and higher possible upside, analysts plainly believe ESAB is more favorable than Toro.

Volatility and Risk

Toro has a beta of 0.66, meaning that its share price is 34% less volatile than the S&P 500. Comparatively, ESAB has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500.

Dividends

Toro pays an annual dividend of $1.56 per share and has a dividend yield of 1.6%. ESAB pays an annual dividend of $0.48 per share and has a dividend yield of 0.7%. Toro pays out 41.7% of its earnings in the form of a dividend. ESAB pays out 17.2% 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. Toro has raised its dividend for 21 consecutive years and ESAB has raised its dividend for 3 consecutive years. Toro is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

87.9% of Toro shares are held by institutional investors. Comparatively, 91.1% of ESAB shares are held by institutional investors. 1.9% of Toro shares are held by insiders. Comparatively, 7.2% of ESAB shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Toro and ESAB’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Toro	7.64%	31.86%	12.35%
ESAB	5.75%	14.48%	5.99%

Valuation & Earnings

This table compares Toro and ESAB”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Toro	$4.75 billion	1.93	$316.10 million	$3.74	25.93
ESAB	$2.84 billion	1.41	$226.77 million	$2.79	23.13

Toro has higher revenue and earnings than ESAB. ESAB is trading at a lower price-to-earnings ratio than Toro, indicating that it is currently the more affordable of the two stocks.

Summary

Toro beats ESAB on 10 of the 17 factors compared between the two stocks.

About Toro

The Toro Company designs, manufactures, markets, and sells professional turf maintenance equipment and services. It operates through two segments: Professional and Residential. The Professional segment offers turf and landscape equipment products, including sports fields and grounds mowing and maintenance equipment, golf course mowing and maintenance equipment, landscape contractor mowing equipment, landscape creation and renovation equipment, and other maintenance equipment; rental, specialty, and underground construction equipment, such as horizontal directional drills, walk and ride trenchers, stand-on skid steers, vacuum excavators, stump grinders, turf renovation products, asset locators, pipe rehabilitation solutions, materials handling equipment, and other after-market tools; and snow and ice management equipment, such as snowplows, as well as stand-on snow and ice removal equipment, such as snowplow, snow brush, and snow thrower attachments, salt and sand spreaders, and related parts and accessories for light and medium duty trucks, utility task vehicles, skid steers, and front-end loaders. This segment also provides irrigation and lighting products that consist of sprinkler heads, electric and hydraulic valves, controllers, computer irrigation central control systems, coupling systems, and ag-irrigation drip tape and hose products, as well as professionally installed landscape lighting products offered through distributors and landscape contractors. The Residential segment provides walk power mowers, zero-turn riding mowers, snow throwers, replacement parts, and home solution products that include grass and hedge trimmers, leaf blowers, blower-vacuums, chainsaws, string trimmers, hoses, and hose-end retail irrigation products. It sells its products through a network of distributors, dealers, mass retailers, hardware retailers, equipment rental centers, home centers, and online. The company was founded in 1914 and is headquartered in Bloomington, Minnesota.

About ESAB

ESAB Corporation engages in the formulation, development, manufacture, and supply of consumable products and equipment for use in cutting, joining, automated welding, and gas control equipment. Its comprehensive range of welding consumables includes electrodes, cored and solid wires, and fluxes using a range of specialty and other materials; and cutting consumables comprising electrodes, nozzles, shields, and tips. The company's equipment ranges from portable welding machines to large customized automated cutting and welding systems. It also offers a range of software and digital solutions to help its customers increase their productivity, remotely monitor their welding operations, and digitize their documentation. The company sells its products under the ESAB brand to various end markets, such as general industry, infrastructure, renewable energy, medical and life sciences, transportation, construction, and energy. It offers its products through independent distributors and direct salespeople. The company operates in North America, South America, Europe, the Middle East, India, Africa, and the Asia Pacific. ESAB Corporation was founded in 1904 and is headquartered in North Bethesda, Maryland.