On Jan 6, Zacks Investment Research upgraded Toro Co. (TTC) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Toro’s fourth-quarter (ended Oct 31, 2014) earnings per share increased an impressive 138% to 19 cents, ahead of the Zacks Consensus Estimates of 16 cents — a positive earnings surprise of 18.75%. This marks the company’s fourth consecutive quarter of positive earnings surprise, with an average of 9.96%.
Toro reported record earnings of $3.02 per share in fiscal 2014, up 15% year over year and ahead of management’s guidance range of $2.94–$2.96 per share. Fiscal 2014 not only marked the conclusion of the company’s first 100-years in business but also the successful completion of its four-year Destination 2014 journey.
Toro had launched Destination 2014 in fiscal 2011, with an aim to achieve $100 million of organic sales growth in each of the four years of the program as well as 12% or better in operating earnings by the end of fiscal 2014. Last year, the company reported sales growth of over $128 million, while for four years it totaled over $430 million. Toro also achieved operating earnings of 12.1% as of fiscal 2014-end.
For fiscal 2015, Toro guided revenue growth of around 8% to 10%. The company forecasts its net earnings per share for the year to be in the range of $3.30–$3.40. For the first quarter of fiscal 2015, the company expects net earnings to be about 47 cents per share.
Toro is well positioned to benefit from its new and innovative product offerings and additional product placements with key customers. Contractors will seek productivity-enhancing solutions for maintaining turf and managing snow and ice. Golf course renovations and development will progress in key markets.
Further, transition of customers to more efficient methods of irrigation globally will drive growth. Although, unfavorable weather and uncertain economic conditions remain challenges for business, commercial and residential development and infrastructure improvements will continue.
Moreover, Toro will continue to benefit from the recent acquisition of the BOSS professional snow and ice management business owing to strong pre-season demand as well as daily onset of cold weather. The company’s international businesses are expected to gain from strong snow thrower demand in Canada and continued golf projects.
Further, the estimates for Toro moved upward in the past 60 days. The Zacks Consensus Estimate for 2015 increased about 2% to $3.40 per share in the said timeframe and for fiscal 2016 it rose 4% to $3.93. .
Other Stocks to Consider
Other favorably ranked stocks in the same sector include Alamo Group, Inc. (ALG), AO Smith Corp. (AOS) and Regal Beloit Corp. (RBC). While Alamo sports a Zacks Rank #1 (Strong Buy), AO Smith and Regal Beloit carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment