TOYO

We rate TOYO Co., Ltd (TOYO) as a Buy with a composite score of 66.7/100 at a current price of $8.38. The stock scores above average across the majority of our six quantitative factors and ranks #205 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in momentum (78th percentile) and value (75th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (35th percentile) and stability (62th percentile) tempers our overall conviction. We assign a Narrow Moat rating (59/100), Medium uncertainty, and Standard capital allocation.

Key items to watch: balance sheet deleveraging progress; sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

TOYO Co., Ltd holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 66.7/100 places it at rank #205 in our full 7,333-stock universe. At $104M in market capitalization, TOYO Co., Ltd is a small-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.

The near-term outlook is constructive, with revenue growing at 184% and momentum in the 78th percentile confirming positive market sentiment and institutional accumulation. The combination of strong top-line growth and favorable price dynamics suggests the company is executing well on its growth strategy. Investment factor at the 35th percentile indicates reinvestment patterns that investors should monitor for sustainability.

The margin cascade tells an important story: gross margins of 12% (-30.1pp vs sector) narrow to operating margins of 5% (+3.7pp vs sector) and net margins of 22.9%, yielding a gross-to-net conversion rate of 185%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $8.38, TOYO Co., Ltd appears undervalued relative to its fundamentals. Our value factor score of 75/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 7.4x (a 67% discount to the sector median of 22.3x), EV/EBITDA of 1.3x (discounted to peers), P/B of 4.9x, P/S of 0.4x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Medium uncertainty rating to TOYO Co., Ltd. The stock presents a balanced risk profile: significant leverage (121% debt-to-equity) and low beta of 0.21 — while defensive, this may indicate limited upside participation in bull markets. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: significant leverage (121% debt-to-equity); low beta of 0.21 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 62th percentile and quality factor at the 68th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (62th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate TOYO Co., Ltd's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 273.5%, and the balance sheet is managed within acceptable parameters (D/E: 121%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; TOYO Co., Ltd falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. Absent a dividend, the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, TOYO Co., Ltd receives a Buy rating with a composite score of 66.7/100 (rank #205 of 7,333). Our quantitative framework assigns a Narrow Moat (59/100, trend: stable), Medium uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 64/100.

Our analysis supports a constructive view on TOYO Co., Ltd. The combination of identifiable competitive advantages, medium uncertainty, and standard capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.