Shares of Toro Co. TTC scaled a new 52-week high of $70.59 on May 22, after the company posted record second-quarter fiscal 2015 results. Further, Toro’s portfolio of innovative products and positive outlook for the rental and specialty construction businesses also aided stock price appreciation.
This Bloomington, MN-based provider of turf and landscape maintenance equipment as well as irrigation solutions for golf courses has a market cap of $3.9 billion. Average volume of shares traded over the last three months is approximately 206K. Toro has delivered a one-year return of about 12.8% and year-to-date return of around 9.6%. The company has outperformed the Zacks Consensus Estimate in three out of four trailing quarters with an average positive surprise of 6.68%.
Growth Drivers
On May 21, Toro posted record earnings of $1.64 per share for second-quarter 2015, which increased 9% year over year due to favorable spring weather that helped to generate robust retail sales. Sales also grew 11% year over year to a record $826 million.
For fiscal 2015, Toro maintained its revenue growth guidance of around 8% to 10%. The company expects its net earnings per share for the year to be in the range of $3.35–$3.45. For the third quarter of fiscal 2015, Toro guided net earnings to be about 85 cents to 90 cents per share.
Toro is well-positioned with its portfolio of innovative products to drive additional sales and gain market share. The company has successfully launched its Reelmaster 5010-H hybrid fairway mower for the golf market; and the new Dingo TX 1000 compact utility loader for the landscape contractor and rental markets that will be released in the third quarter looks promising based on early customer demand.
Hence, innovative equipment and irrigation products backed by exceptional customer service will assist Toro to continue its leadership position in golf market. Toro’s golf and ground equipment businesses witnessed improved performance in the second quarter backed by strong retail in channel demand, especially for utility vehicles in sprayer products. Based on favorable trends, it appears that the golf industry is ready for a strong 2015.
Market conditions also remain positive for the rental and specialty construction businesses led by the continued growth of commercial and residential construction activity. The strength of the construction market also confirms opportunities for Toro’s residential and commercial irrigation and lighting businesses.
At present, Toro carries a Zacks Rank #4 (Sell).
Other Stocks to Consider
Stocks to consider in same sector include Snap-on Incorporated SNA, AO Smith Corp. AOS and Capstone Turbine Corp. CPST. All these stocks carry a Zacks Rank #2 (Buy).
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