Reviewing Makita (OTCMKTS:MKTAY) & Toro (NYSE:TTC)

Makita (OTCMKTS:MKTAY) and Toro (NYSE:TTC) are both mid-cap consumer discretionary companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, dividends, institutional ownership, earnings, valuation, profitability and analyst recommendations.

Institutional & Insider Ownership

88.0% of Toro shares are held by institutional investors. 1.0% of Makita shares are held by company insiders. Comparatively, 0.4% of Toro shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Makita and Toro”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Makita	$4.95 billion	1.60	$521.00 million	$1.82	16.20
Toro	$4.58 billion	1.52	$418.90 million	$3.90	18.06

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

Analyst Recommendations

This is a summary of recent recommendations and price targets for Makita and Toro, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Makita	0	1	1	1	3.00
Toro	0	4	1	0	2.20

Toro has a consensus target price of $82.75, indicating a potential upside of 17.51%. Given Toro’s higher probable upside, analysts clearly believe Toro is more favorable than Makita.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Makita	10.05%	8.22%	6.92%
Toro	8.77%	27.99%	11.60%

Dividends

Makita pays an annual dividend of $0.09 per share and has a dividend yield of 0.3%. Toro pays an annual dividend of $1.52 per share and has a dividend yield of 2.2%. Makita pays out 4.9% of its earnings in the form of a dividend. Toro pays out 39.0% 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. Toro is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Makita has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500. Comparatively, Toro has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500.

Summary

Toro beats Makita on 9 of the 17 factors compared between the two stocks.

About Makita

Makita Corporation engages in the manufacture and sale of electric power tools, pneumatic tools, and gardening and household equipment in Japan, Europe, North America, Asia, Australia, Brazil, and the United Arab Emirates. It offers cordless, drilling/fastening, impact drilling/demolition, grinding/sanding, sawing, planning/routering, pneumatic, outdoor power, and dust extraction/other equipment, as well as accessories; and cutting equipment for new materials, masonry, and metals. The company was formerly known as Makita Electric Works, Ltd. and changed its name to Makita Corporation in April 1991. Makita Corporation was founded in 1915 and is headquartered in Anjo, Japan.

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.