Toro (TTC) Q1 Earnings & Sales Top Estimates, EPS View Up

The Toro Company (NYSE:TTC) posted first-quarter fiscal 2018 (ended Feb 2, 2018) earnings of 48 cents per share, up 28% from 37 cents recorded in the year-ago quarter. Additionally, earnings beat the Zacks Consensus Estimate of 44 cents.

On a reported basis, earnings per share came in at 21 cents compared with 41 cents recorded in the prior-year quarter.

Toro’s net sales were up 6.3% year over year to $548 million in the quarter. The top line also beat the Zacks Consensus Estimate of $534 million.

Operational Update

Cost of sales in the quarter went up 6.7% year over year to $344 million. Gross profit came in at $204 million, up 5.6% year over year. Gross margin shrunk 20 basis points (bps) year over year to 37.3% due to elevated commodity costs and unfavorable product mix.

Selling, general and administrative expenses were up 3.3% to $137 million. Operating profit improved 10.5% year over year to $66.9 million. Operating margin came in at 12.2%, expanding 50 bps year over year.

Segment Performance

The Professional segment’s sales increased 8.6% year over year to $403.7 million. Operating profit recorded by the segment came in at $75.9 million, up 11.4% from $68.2 million recorded in the year-ago quarter.

Net sales at the Residential segment inched up 1.5% year over year to $142.5 million. Operating profit at the segment was $15.7 million, down 5.1% year over year.

Financial Update

Toro had cash and cash equivalents of $219.7 million as of Feb 2, 2018, compared with $158.9 million as of Feb 3, 2017. The company reported cash from operations of $8.1 million during the fiscal first quarter compared to $15.3 million recorded in the comparable quarter last fiscal.

Long-term debt, excluding the current portion, totaled $302.5 million as of Feb 2, 2018, compared with $315.3 million as of Feb 3, 2017.

Outlook

For fiscal 2018, Toro raised its earnings per share guidance range to $2.67-$2.73, from the previous range of $2.57-$2.63. The company maintained its revenue growth outlook for the fiscal to exceed 4%. For second-quarter fiscal 2018, the company guides net earnings in the band of $1.77-$1.22 per share.

Toro is poised to benefit from upbeat trends in the golf business with increased sales of green mowers and large reel units featuring Toro EdgeSeries reels. Further, the company’s new initiative, Vision 2020, will help focus on driving profitable growth while emphasizing on innovation and serving customers.

Share Price Performance

In a year’s time, shares of Toro have outperformed the industry to which it belongs to. In fact, the company’s shares have gained 2.7%, while the industry incurred 3.8% loss.

Zacks Rank & Key Picks

Toro currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the same sector include Makita Corporation (OTC:MKTAY) , Brunswick Corporation (NYSE:BC) and Snap-on Incorporated (NYSE:SNA) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Makita Corporation has a long-term earnings growth rate of 11.7%. Its shares have gained 21.2%, over the past six months.

Brunswick Corporation has a long-term earnings growth rate of 16.3%. The company’s shares have rallied 10.7% during the same time frame.

Snap-on Incorporated has a long-term earnings growth rate of 10.3%. The stock has gained 11.8% in six months’ time.

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