Macroeconomic concerns have eaten into results at Toro (TTC -0.76%), and investors are not waiting around for greener pastures.
Shares of Toro were down 12% for the week as of 1:30 ET on Thursday, according to data provided by S&P Global Market Intelligence, following news about the company's most recent quarter.
A tough operating environment
Toro makes equipment for lawn care and other outdoor tasks. The company earned $1.18 per share in its fiscal third quarter ending Aug. 2 on sales of $1.16 billion. That fell short of Wall Street's consensus estimates of $1.18 per share in earnings on sales of $1.26 billion.
Toro also lowered its full-year earnings guidance to a range of $4.15 to $4.20 per share, down from $4.25 to $4.35. Wall Street had been expecting $4.30 per share.
The company said it is seeing strong demand from its professional segment, including underground construction and golf course equipment. But in lawn care, "we expect a heightened level of macro uncertainty will continue to drive near-term caution."
Is Toro stock a buy?
Toro is well run, but it is tough to fight the cycle. A period of higher interest rates coupled with growing economic uncertainty is eating into housing sales, which in turn is having an impact on demand for lawn care equipment.
The good news is that excess inventory issues that plagued the company in previous quarters have now been resolved. Should dealers see signs of increasing demand for lawn equipment, they are likely to want to fill their supply channels quickly, which could lead to a quick turnaround in the lawn care business.
Toro is a quality company with strong brands and shares that are now down 15% year to date. For long-term investors, it is a good time to put Toro on their radar.
