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Momentum

Toro Company (TCC) recently broke a short-term down trend to move back within striking distance of the multi-year high at $58.50. With an average earnings surprise of 55% over the last four quarters, TTC has some nice upward momentum.

Company Description

The Toro Company designs, manufactures and sells turf maintenance equipment and irrigation systems worldwide. The company was founded in 1914 and has a market cap of $1.75 billion.

Toro has seen its share price rip higher with the market over the last 18 months, recently getting an extra boost from better than expected Q2 results from mid August.

Second-Quarter Results

Revenue for the period was up 14% from last year to $459 million. Earnings also came in strong at $1.01, 29% ahead of the Zacks Consensus Estimate, pushing the company average earnings surprise to 55% over the last four quarters.

The good quarter was driven by strong demand from the company's professional segment, where the improved global economy lifted capital spending. Sales for the segment were up 22% from last year.

Toro's solid revenue growth was complimented by ongoing attention to costs, with gross margin climbing to 35.2% during the quarter from 34% last year. The company's SG&A expenses fell to 23.5% of sales from 23.9%.

Cash Position up $30 Million

Toro's cash position was up $32 million over the quarter to $163 million while its total debt load of $228 million stayed just about the same from last year.

Estimates

We saw some nice upward movement in estimates on the good quarter, with the current year up 26 cents to $2.72 and the next year up 29 cents to $3.20, a bullish 18% growth projection.

Valuation

Not only does TCC have some nice upward momentum, it also has value, trading with a forward P/E of 20X, a solid discount to the industry average of 20X.

2-Year Chart

TCC recently broke a short-term down trend to move back within striking distance of the multi-year high of $58.50. The MACD below the chart is bullish, with the short-term average trending above the long-term average. Look for support from the long-term trend line and short-term low at $46 on any weakness. take a look below.

TTC: Toro Company >
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Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.

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