The Toro Company: Stock Snapshot And Financial Highlights – ValueWalk Premium

The Toro Company: Stock Snapshot And Financial Highlights

The Toro Company: Stock Snapshot And Financial Highlights


The Toro Company (NYSE:TTC) designs, manufactures, and markets professional turf maintenance equipment and services, turf irrigation systems, agricultural micro-irrigation systems, landscaping equipment and lighting, light construction and rental equipment, as well as residential yard and snow removal products. The company’s business is organized into three segments 1). Professional, 2). Residential, and 3). Distribution segments. Toro Company sells its products primarily under the Toro, Exmark, Irritrol, Hayter, Pope, Lawn-Boy, and Lawn Genie names. The company was founded in 1914 and is headquartered in Bloomington, Minnesota.

Stock Snapshot

The Toro Company (NYSE:TTC)’s common stock closed at USD 39.21, with a market capitalization of USD 2.30 billion on  the 24th of September, 2012 . The stock has an average volume of 420,150 over the last three months. The stock is trading at a P/E ratio of 17.8, a P/B ratio of 6.8 and a P/S ratio of 1.17.

Financial Highlights


For the 9 months ending in Aug 2012, the company reported net sales of USD1, 619 million compared to USD 1,515 million in the same period last year, representing YOY growth of 6.83%. The major contributors to the growth in overall revenue included Professional segment sales, which increased at 7.66% YOY over the first 9 months of the year. Sales for most professional segment businesses increased due to the successful introduction of new products and increased prices. The gross revenue for the residential section increased by 5.2% YOY, during the first 9 months of the year. The major reasons for the positive growth of the net sales from the residential segment included favorable early spring weather conditions that drove strong demand for walking power mowers and riders and positive customer response to newly introduced products. However, for the most recent quarter, the sales of the residential segment decreased by 7.9% on a YOY basis. This decrease was due mainly to lower preseason shipments of snow thrower products, from higher field inventory levels entering the 2012/2013 snow season, resulting from the lack of snowfall during the 2011/2012 winter season.

Gross Profit:

The company reported gross profit margins of 34.6% for 9MFY12, which is 40 basis points higher than the gross profit margin of 34.20% for 9MFY11. The major contributors to this growth included price increases and favorable product mix for the third quarter comparison, and manufacturing efficiencies from increased production and demand for the company’s products. The positive impact of these factors was dampened by higher commodity prices and lower margins on product sales from acquisitions.

Net Earnings

For 9MFY12, the company reported net earnings of USD 129 million, as compared to USD 112 million for the corresponding period last year. The company had reported diluted earnings per share of USD 2.13, which is higher than the figure of USD 1.76 achieved in the corresponding period last year; this represents a YOY increase of 21%. The primary factors contributing to the company’s improved performance in the year to date are higher sales volumes, an increase in gross profit, and costs associated with a rework for the walk power mowers last fiscal year, that were not repeated in the current fiscal year.

Financial Position

As of 3rd August 2012’ the company had USD 143.06 million in their cash balance, representing a cash value of USD 2.44 per share. The total debt of the company stood at USD 225.32 million, resulting in a debt to equity ratio of 66.7. The book value per share of the company stood at USD 5.75

Factors to watch for!

* The company’s strong brand name and its penetration in targeted markets!

* Strong year to date revenue growth despite challenging economic circumstances!

* Strong history of developing and successfully marketing new products!

* Relative valuation measures are on lower side!

* 5 year average dividend yield of 1.40% and a payout ratio of 19%!


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