On Monday, DA Davidson adjusted its price target on shares of Toro (NYSE:TTC), a leading worldwide provider of innovative solutions for the outdoor environment, to $88.00, a decrease from the previous target of $103.00. The firm has decided to maintain a Neutral rating on the stock.
The revision follows Toro's third fiscal quarter of 2024 earnings release, where the company's performance in several end-markets was analyzed. Notably, sectors such as Golf and Underground have continued to experience strong performance, aligning with the firm's expectations. The analyst expressed optimism regarding the future of these markets, anticipating a favorable outlook into the next year.
Despite positive trends in certain areas, challenges persist in the Snow/Ice segment, as was anticipated. Additionally, the consumer and professional landscaping market is facing a rocky journey. The firm expressed a desire to see Toro return to its historical pattern of double-digit earnings growth. However, they emphasized a preference for this growth to stem from a more robust business foundation rather than a lower short-term earnings base.
The reduction in the price target reflects a cautious stance on Toro's near-term earnings potential. The firm's analysis suggests that while some market segments are thriving, others continue to encounter headwinds. The maintained Neutral rating indicates that while the analyst sees potential in the company, they await stronger evidence of a sustainable growth trajectory before altering their stance on the stock.
In other recent news, The Toro Company (NYSE:TTC) has reported a nearly 7% increase in net sales, totaling $1.16 billion in the third quarter, with its Residential segment experiencing significant growth. This growth was primarily driven by increased shipments and a new partnership with Lowe's (NYSE:LOW).
Adjusted diluted earnings per share also rose to $1.18, marking a 24% improvement from the previous year. Despite these positive developments, The Toro Company revised its full-year fiscal '24 guidance, indicating a more cautious outlook in homeowner facing markets.
The company's multiyear productivity initiative, AMP (OTC:AMLTF), is set to deliver $100 million in annualized savings by fiscal 2027. Year-to-date free cash flow has improved by over $200 million, with the full-year free cash flow conversion rate expected to be at least 100%. The Toro Company also plans to invest $115 million in capital expenditures in fiscal 2024 and has repurchased nearly 1.2 million shares.
In the light of these recent developments, the company anticipates cautious spending in homeowner facing markets. However, it expects strong demand and significant order backlogs to benefit the underground construction and golf and grounds equipment businesses.
Despite some challenges, such as lower shipments of certain products and high field inventory levels, The Toro Company remains confident in driving long-term profitable growth through innovation, investments, and a strong market position.
InvestingPro Insights
Recent data from InvestingPro provides a deeper dive into Toro's financial health and market performance. With a market capitalization of $8.42 billion, Toro trades with a P/E ratio of 21.54, which is slightly adjusted to 20.29 when looking at the last twelve months as of Q3 2024. While the company's revenue has seen a slight decline of 5.29% over the last twelve months, its quarterly revenue growth stands at 6.94%, indicating some resilience in its business operations.
One of the InvestingPro Tips highlights that Toro has a long-standing history of rewarding shareholders, having raised its dividend for 20 consecutive years, and maintaining dividend payments for 41 consecutive years, with the dividend yield currently at 1.76%. This could be a significant factor for investors seeking stable income. Additionally, the company's liquid assets exceed its short-term obligations, suggesting financial stability.
Despite the recent price drop, where the stock has taken an 11.4% hit over the last week, analysts predict the company will be profitable this year. Toro's operational strength is further underscored by an operating income margin of 11.56% as of the last twelve months leading up to Q3 2024. For investors interested in more metrics and analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/TTC.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.