Toromont Industries offers exceptional value through its deep-rooted dealer relationships and recurring revenue model that generates predictable cash flows across economic cycles. The company commands pricing power and customer loyalty that few industrial businesses can match while its aftermarket parts and service business provides stable, high-margin revenues that smooth cyclical volatility.
With government infrastructure spending accelerating across North America and energy transition projects requiring decades of heavy equipment deployment, the firm sits at the intersection of multiple secular tailwinds that should drive earnings growth for years to come.
The shares trade at 23.9 times estimated 2026 earnings. That valuation appears premium to typical industrials but is justified by the company’s exceptional business quality, predictable earnings stream, and growth trajectory. The multiple reflects the scarcity value of exclusive dealership territories, the defensive nature of recurring service revenues that comprise a significant portion of profits, and strategic exposure to infrastructure modernization and electrification megatrends that will unfold over decades.
TOROMONT INDUSTRIES LTD. (Toronto symbol TIH) distributes a broad range of Caterpillar and other branded industrial equipment (such as bulldozers, backhoe loaders and drills) in eastern Canada and the Eastern Seaboard of the U.S. It also makes refrigeration systems through its CIMCO business.
1) Toromont’s Equipment Group (92% of revenue) is the exclusive dealer of Caterpillar heavy equipment, such as bulldozers, backhoes and excavators, for eastern Canada. The company is also the MaK engine dealer for the Eastern Seaboard of the U.S., from Maine to Virginia.
2) The CIMCO business (8%) is a market leader in the design, engineering, fabrication, installation and after-sale support of refrigeration systems in industrial and recreational markets.
In January 2025, Toromont acquired 60% of AVL Manufacturing Inc. This private firm, based in Hamilton, Ontario, makes specialized enclosures for power generators and heating equipment. It sells these products to industrial customers in eastern North America, including oil and gas producers, automakers, construction firms and datacentre operators.
The company paid $67.5 million in cash plus common shares worth $12.8 million, for a total of $80.3 million. It will also buy the remaining 40% by 2031, with the final price based on AVL’s performance.
Despite the new operations, Toromont’s revenue in the third quarter of 2025 fell 1.7%, to $1.31 billion from $1.39 billion a year earlier.
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Revenue at the Equipment Group fell 4%. That’s mainly due to a 15% drop in sales of new equipment to mining companies, as the year-earlier quarter benefitted from unusually high deliveries. However, demand for used equipment, rental products and support services all improved. CIMCO’s revenue gained 22% on higher deliveries.
A $13.7 million pre-tax gain on the sale of a property helped lift Toromont’s earnings in the quarter by 8.1%, to $1.73 a share (or a total of $140.6 million) from $1.60 a share (or $131.0 million).
Toromont’s shares are at new highs for our subscribers
The stock is up over 45% since the start of 2025, and is now trading at record highs. It now trades at 23.9 times the $6.85 a share that Toromont will probably earn for all of 2026.
That’s a reasonable multiple considering the company’s high share of its niche markets. It should also benefit from Ottawa’s plan to accelerate various infrastructure projects.
With the April 2025 payment, the company raised your quarterly dividend by 8.3%, to $0.52 a share from $0.48. The new annual rate of $2.08 yields 1.3%.
Toromont has paid regular dividends since it went public in 1968 and has raised the annual rate each of the past 36 years. Including this latest increase, the company has lifted its dividend 10.9% annually over the last 5 years. Its TSI Dividend Sustainability Rating is Above Average.
Recommendation in The Successful Investor: Toromont Industries Ltd. is a buy.
