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Toro's (TTC) Q4 Earnings Beat Estimates, Revenues Lag
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The Toro Company (TTC - Free Report) reported its fourth-quarter fiscal 2016 (ended Oct 31, 2016) results wherein earnings improved over 29% to 27 cents per share from 21 cents in the year-ago quarter. Further, earnings beat the Zacks Consensus Estimate of 22 cents.
Shares gained 6% following the earnings announcement on Dec 8.
Toro’s net sales decreased 2.6% year over year to $468 million in the quarter. The top line missed the Zacks Consensus Estimate of $481 million.
Cost of sales in the quarter soared 76% year over year to $296 million. Gross profit came in at $172 million, flat year over year. Gross margin expanded 100 basis points (bps) year over year to 36.8%, aided by favorable commodity costs, productivity improvements and segment mix, partially offset by the impacts of unfavorable currency exchange.
Selling, general and administrative expenses decreased 2% to $128.6 million. Operating profit improved 8% year over year to $43.5 million. Operating margin was at 9.3%, up 90 bps year over year.
Segment Performance
The Professional segment’s sales increased 2% year over year to $343 million. The improvement was primarily driven by strong demand for golf products paired with favorable weather conditions experienced in the quarter. Operating profit at the segment was $59.7 million, up 21% from $49.3 million in the year-ago quarter.
Net sales at the Residential segment decreased 19% year over year to $119 million due to decline in sales of residential snow products. Operating profit at the segment plunged 42% year over year to $9.2 million.
At the end of fiscal 2016, Toro had cash and cash equivalents of $273.6 million compared with $126.3 million at the end of fiscal 2015. The company generated $361.9 million in cash from operating activities for the period of fiscal 2016, compared with $237 million in the comparable year-ago period. At the end of the reported quarter, total debt reduced to $331 million from $355 million at the end of the prior-fiscal.
Toro’s Board of Directors has hiked its dividend by 16.7% to 17.5 cents per share. This dividend is payable on Jan 12, 2017 to shareholders of record on Dec 27, 2016. During fiscal 2016, the company returned almost $178 million to shareholders through the payment of $65.9 million in dividends and repurchased approximately 2.7 million shares.
Fiscal 2016 Performance
Toro reported earnings of $2.06 in fiscal 2016, up 16% year over year, but fell short of the Zacks Consensus Estimate of $2.25. Revenues edged up 0.1% year over year to $2.39 billion, but fell short of the Zacks Consensus Estimate of $2.5 billion.
Outlook
For fiscal 2017, Toro projects revenue growth of around 3% to 4% and net earnings to be about $2.20 to $2.26 per share. For the first quarter, the company expects net earnings to be about 34 cents to 36 cents per share.
The company remains focused on delivering innovative products. Recent weather patterns and resulting retail activity remain positive. However, unfavorable weather conditions could negatively impact demand throughout the year.
Toro currently carries a Zacks Rank #3 (Hold).
Shares of Toro have outperformed the Zacks categorized Tools-Hand Held industry year to date. In fact, Toro’s shares have gained 54.76% year to date, while the industry has just logged in a return of around 17.63% year to date. The company’s price performance so far this year is backed by its new product line-up and positive outlook for growth.
Stocks to Consider
Some better-ranked stocks in the same sector include Alarm.Com Holdings, Inc. (ALRM - Free Report) , Fairmount Santrol Holdings Inc. and Donaldson Company, Inc. (DCI - Free Report) .
Fairmount Santrol Holdings, which also carries a Zacks Rank #2 (Buy), has an average positive earnings surprise of 25.00% in the last four quarters.
Donaldson, a Zacks Rank #2, has delivered a positive average earnings surprise of 3.23% in the last four quarters.
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Toro's (TTC) Q4 Earnings Beat Estimates, Revenues Lag
The Toro Company (TTC - Free Report) reported its fourth-quarter fiscal 2016 (ended Oct 31, 2016) results wherein earnings improved over 29% to 27 cents per share from 21 cents in the year-ago quarter. Further, earnings beat the Zacks Consensus Estimate of 22 cents.
Shares gained 6% following the earnings announcement on Dec 8.
Toro’s net sales decreased 2.6% year over year to $468 million in the quarter. The top line missed the Zacks Consensus Estimate of $481 million.
Operational Update
Cost of sales in the quarter soared 76% year over year to $296 million. Gross profit came in at $172 million, flat year over year. Gross margin expanded 100 basis points (bps) year over year to 36.8%, aided by favorable commodity costs, productivity improvements and segment mix, partially offset by the impacts of unfavorable currency exchange.
Selling, general and administrative expenses decreased 2% to $128.6 million. Operating profit improved 8% year over year to $43.5 million. Operating margin was at 9.3%, up 90 bps year over year.
Segment Performance
The Professional segment’s sales increased 2% year over year to $343 million. The improvement was primarily driven by strong demand for golf products paired with favorable weather conditions experienced in the quarter. Operating profit at the segment was $59.7 million, up 21% from $49.3 million in the year-ago quarter.
Net sales at the Residential segment decreased 19% year over year to $119 million due to decline in sales of residential snow products. Operating profit at the segment plunged 42% year over year to $9.2 million.
TORO CO Price, Consensus and EPS Surprise
TORO CO Price, Consensus and EPS Surprise | TORO CO Quote
Financial Update
At the end of fiscal 2016, Toro had cash and cash equivalents of $273.6 million compared with $126.3 million at the end of fiscal 2015. The company generated $361.9 million in cash from operating activities for the period of fiscal 2016, compared with $237 million in the comparable year-ago period. At the end of the reported quarter, total debt reduced to $331 million from $355 million at the end of the prior-fiscal.
Toro’s Board of Directors has hiked its dividend by 16.7% to 17.5 cents per share. This dividend is payable on Jan 12, 2017 to shareholders of record on Dec 27, 2016. During fiscal 2016, the company returned almost $178 million to shareholders through the payment of $65.9 million in dividends and repurchased approximately 2.7 million shares.
Fiscal 2016 Performance
Toro reported earnings of $2.06 in fiscal 2016, up 16% year over year, but fell short of the Zacks Consensus Estimate of $2.25. Revenues edged up 0.1% year over year to $2.39 billion, but fell short of the Zacks Consensus Estimate of $2.5 billion.
Outlook
For fiscal 2017, Toro projects revenue growth of around 3% to 4% and net earnings to be about $2.20 to $2.26 per share. For the first quarter, the company expects net earnings to be about 34 cents to 36 cents per share.
The company remains focused on delivering innovative products. Recent weather patterns and resulting retail activity remain positive. However, unfavorable weather conditions could negatively impact demand throughout the year.
Toro currently carries a Zacks Rank #3 (Hold).
Shares of Toro have outperformed the Zacks categorized Tools-Hand Held industry year to date. In fact, Toro’s shares have gained 54.76% year to date, while the industry has just logged in a return of around 17.63% year to date. The company’s price performance so far this year is backed by its new product line-up and positive outlook for growth.
Stocks to Consider
Some better-ranked stocks in the same sector include Alarm.Com Holdings, Inc. (ALRM - Free Report) , Fairmount Santrol Holdings Inc. and Donaldson Company, Inc. (DCI - Free Report) .
Alarm.Com Holdings has an impressive track record of earnings surprises, with an average positive earnings surprise of 9.09% in the last four quarters and carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Fairmount Santrol Holdings, which also carries a Zacks Rank #2 (Buy), has an average positive earnings surprise of 25.00% in the last four quarters.
Donaldson, a Zacks Rank #2, has delivered a positive average earnings surprise of 3.23% in the last four quarters.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>