An infrastructure windfall is slowly but surely transforming Canada’s skyline. The nation’s federal government has made infrastructure spending a structural driver of economic growth. This decision positions the domestic heavy equipment market as a primary beneficiary.

Ottawa's "Building Canada Strong" budget has committed CAD 115bn ($84bn) in capital infrastructure investment over 2025-26 to 2029-30, a pace of deployment described by the government as "scale and speed not seen in generations," and one that nearly doubles annual federal capital outlays from CAD 32.2bn in 2024–25 to a projected CAD 59.6bn by 2029-30.

The money is already moving: the Build Communities Strong Fund alone unlocks CAD 51bn over ten years beginning in 2026-27, with trade corridor and Arctic infrastructure programs adding further demand for heavy iron on job sites from Windsor to Nunavut.

For equipment dealers, that trajectory means a sustained 5-year order cycle, with product support, rentals, and parts volumes compounding alongside it. The resilience of this demand outlook is further supported by the Association of Equipment Manufacturers' May 2026 Canadian Economic Impact Report, which confirms Canada's equipment manufacturing industry is holding firm despite broader macroeconomic headwinds.

Within this landscape, Toromont has built a legacy as Canada's diversified powerhouse, serving customers through two distinct divisions: the Equipment Group as a leading Caterpillar dealer, and CIMCO, a century-old market leader in thermal management solutions.

Execution muscle

The company entered FY 26 with a strong quarter. Revenue clocked in at CAD 1.2bn, up 13% y/y from CAD 1.1bn. The more important story here is leverage: operating profit jumped 44% y/y to CAD 143m from CAD 99.6m in Q1 25, highlighting how Toromont turned incremental sales into real earnings.

Its operating margin widened significantly, up 250bp to 11.6% (from 9.1%) as equipment deliveries, rentals, and product support did their bit, with power systems and the recently acquired AVL Manufacturing Inc. doing the heavy lifting.

The business mix mattered. Equipment Group execution drove most of the upside, while CIMCO grew modestly on revenue but lagged on profitability due to project timing and cost drag. Sure, that’s not ideal, but it’s also seasonal and reversible.

Net income rose 25% y/y to CAD 92.7m, up from CAD 74.4m, even after absorbing higher expenses and purchase commitment costs tied to AVL Manufacturing ownership—friction that didn’t derail momentum.

Bottom line: Toromont isn’t just growing; it’s operating with confidence. Backlog strength and margin expansion suggest this wasn’t a one-off quarter, though CIMCO needs cleaner execution for the story to stay intact.

Quality costs

Toromont’s stock has been on a tear, up 91.6% over the past 12 months and now sitting at CAD 217.3, not far from its 52-week high of CAD 225. That kind of run doesn’t come quietly, and it definitely doesn't come cheap.

Trading at a FY 26 forward P/E of 30.9x, the stock is trading well above its 3-year average of 21.3x, which tells you the market is already assuming execution stays tight and margins hold up. With a CAD 17.7bn (USD 12.9bn) market cap, Toromont is firmly priced as a high-quality compounder.

Even so, the Street isn't all that convinced. Six out of nine analysts have “Buy” ratings on the stock, with an average target price of CAD 226 implies just 4% upside potential. That’s basically the market saying, "Great company, but all the easy money has already been made.”

Turbulence ahead

Toromont has earned its stripes as one of Canada's most dependable operators, and this year's performance only adds to that legacy. But a stock that has run this hard leaves little room for disappointment. CIMCO's uneven execution is a thread worth pulling. So is the durability of federal infrastructure budgets if Ottawa's fiscal priorities shift. Toromont is a great business, although at today's price, the market is betting it stays perfect.