Toro Company ($TTC), a prominent player in the landscaping equipment industry, experienced a significant decline in its stock performance Thursday, following the release of its fiscal third-quarter results, which fell short of analyst expectations. In a climate marked by increasing macroeconomic uncertainty, the company reported revenue of $1.16 billion for the quarter ending August 2, an improvement from $1.08 billion in the same period last year.
However, this figure was well below the projected $1.26 billion anticipated by analysts surveyed by Capital IQ. The adjusted earnings showed a rise, climbing to $1.18 per share compared to $0.95 from the previous year. Despite this year-over-year growth, it also missed the analyst consensus estimate of $1.23 per share, leading to a nearly 10% plunge in Toro’s share price during Thursday’s trading session. A breakdown of sales in different segments revealed that the professional segment saw a decline of 1.7% compared to the previous year, totaling $880.9 million.
This downturn was primarily influenced by decreased shipments of snow and ice management products, lawn care equipment, and compact utility loaders. Nonetheless, this decline was partially counterbalanced by increased shipments of golf and grounds products, in addition to underground construction equipment, attributable to net price realization. In contrast, the company's residential segment experienced remarkable growth, with sales surging nearly 53% to reach $267.5 million.
This spike was mostly due to heightened shipments within the company’s mass channel, a trend expected after an aggressive destocking phase last year and the strategic incorporation of Lowe's ($L.US) into Toro's distribution network, as noted by Chief Executive Richard Olson in his remarks. Looking forward into fiscal year 2024, Toro has revised its sales growth guidance to approximately 1%, a decrease from the previous expectation of growth within the low single-digit range.
The company now anticipates adjusted earnings per share (EPS) between $4.15 and $4.20, a reduction from its earlier forecast of $4.25 to $4.35. Market analysts participating in a Capital IQ survey are projecting Toro's revenue for the ongoing year to be around $4.72 billion, alongside a normalized EPS estimation of $4.31. Richard Olson expressed a cautiously optimistic view by stating, "The projected strength in infrastructure spending for the foreseeable future is a positive outlier in the construction industry, and golf rounds played show no signs of slowing down." However, he also acknowledged that "a heightened level of macro uncertainty will continue to drive near-term caution" regarding consumer spending on lawn care products. Shares of Toro Company closed at a price of $81.95, reflecting a significant change of -9.05 and a percentage change of -9.95, indicative of the current market sentiment towards the company's near-term prospects..