Shares of The Toro Company TTC have gained 4.45% since it reported record-setting results for fiscal 2015 aided by strong contributions from new BOSS snow and ice management business, its core residential and landscape contractor businesses and newer rental and construction business. Also, the company also remains focused on product innovation, productivity and profitable growth and has provided a positive outlook for fiscal 2016.
The manufacturer of professional turf maintenance equipment and services reported fourth-quarter fiscal 2015 (ended Oct 31, 2015) earnings of 42 cents per share, which increased a whopping 121% from the year-ago quarter. For fiscal 2015, Toro posted record earnings of $3.55 per share, up 17.5% year over year. Net sales of $2.4 billion and operating earnings of $299 million were the other records set for the year.
Mike Hoffman, Chairman and CEO stated snowy weather conditions experienced during the last two winters in North America, along with the successful launch of several innovative new products this year, led to a good first year for the BOSS business. The landscape contractor business enjoyed increased demand for its full range of mowing, aerating, and new spreader sprayer equipment lines. The newer rental and construction business also had a good year. The compact utility loader product line continues to be successful, helped by the introduction of the new award-winning TX 1000.
Hoffman noted that construction trends continued to be positive, which is good for rental industry. This led to increased investment by rental operators, which in turn boosted demand for Toro’s rental and construction product offerings.
Retail demand for golf equipment continues to grow as the industry keeps on witnessing improvement in golf rounds played and increased course revenues which are leading to capital investments in course renovation projects and equipment acquisition. The golf irrigation business also performed well in the year as the new Infinity golf sprinkler head, along with updated links central control software, remain highly popular.
Hoffman stated that the company expects revenue growth of about 4% for fiscal 2016 and net earnings of about $3.80 to $3.90 per share. First-quarter 2016 net earnings are projected at about 58-60 cents per share.
As per President and CEO, Rick Olson, the BOSS business is well-positioned to continue to be a leader in the snow and ice management industry. The business is effectively expanding the strong distribution network globally and is testing several new products for 2016.
Likewise, the landscape contractor business is also launching a number of product enhancements. The latest examples of such innovation are Toro’s all-new GrandStand Multi Force models, featuring a quick attach system that allows contractors to convert these stand-on mowers into multiseason work horses. Additional attachments like a heavy duty blower and a power broom are also in the pipeline.
Olson added the solid retail activity in fiscal 2015 speaks of positive trends in the golf industry. Capital investments have resumed with owners moving forward with projects ranging from minor course face lifts to major renovations. Early next year, Toro will be introducing a number of new innovations across product categories to capitalize on the demand.
The ever-growing need for intelligent water management has golf course owners seeking Toro’s advanced solutions. Contractors are also opting for Toro’s unique lighting systems brass and copper and new aluminum product lines to capitalize on the growing professional lighting market. Toro anticipates continued growth in lighting sales in the coming year.
Even though Toro’s international business will face headwinds in the form of currency exchange rate headwinds, regional economic issues, and social and political unrest in troubled areas, the demand will be on the rise in most regions for golf equipment to replace aging fleets. Toro is well equipped with multiple new products to cater to the global needs.
At present, Toro carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks in the consumer discretionary sector are A-Mark Precious Metals, Inc. AMRK, Activision Blizzard, Inc. ATVI and Masonite International Corp. DOOR. All these stocks sport a Zacks Rank #1 (Strong Buy).
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