Toro (TTC) Reaches 52-Week High on Upbeat FY15 Outlook

Shares of The Toro Company TTC reached a new 52-week high of $74.12 on Oct 9 and eventually closed trading marginally lower at $73.52. The stock price has been persistently rising since the company posted record third-quarter fiscal 2015results.

Toro Company has delivered a year-to-date return of about 15.22%. Average volume of shares traded over the last three months is approximately 350K.

This Bloomington, MN-based provider of turf and landscape maintenance equipment as well as irrigation solutions for golf courses has a market cap of $4 billion. The company has outperformed the Zacks Consensus Estimate in three of trailing four quarters with an average positive surprise of 7.50%.  

Drivers

The stock has been gaining since the company posted record third-quarter fiscal 2015 results and upbeat guidance for the full fiscal year on Aug 20, 2015. The company posted record earnings of 94 cents per share for third-quarter fiscal 2015, which increased 8% year over year due to favorable summer growing conditions, particularly in its domestic markets along with the success of new product launches. Sales too, grew 7% year over year to a record $607 million fueled by increased demand for professional segment products.

Given the strong fiscal third-quarter earnings, Toro raised its fiscal 2015 earnings per share outlook to about $3.50, from the previous expectation of $3.35–$3.45. Revenue growth guidance is currently pegged at about 10%, up from the previous expectation of about 8% to 10%.

Toro is well-positioned with its portfolio of innovative products to drive additional sales and gain market share. In the fourth quarter, the company is witnessing strong retail sales across its businesses. While unfavorable foreign currency rates as well as the extended drought like conditions in certain regions of the country will remain headwinds, the company will benefit from solid demand for residential and professional snow and ice management products on the heels of a strong snow season in North America in fiscal 2014.

A spur in housing starts this year bodes well for the company's rental and construction businesses. The rental market remains solid and the company is experiencing strong demand from key accounts. Toro's new TX 1000 compact utility loader enjoyed a robust launch late in the fiscal third quarter. Pent-up retail demand and a solid backorder position should boost fiscal fourth-quarter sales activity.

Momentum in the golf equipment and irrigation business should continue to be positive. The fiscal fourth quarter is typically a significant irrigation project quarter, so the company expects late-summer replacement and renovation works to present additional sales opportunities.

The Zacks Consensus Estimate for the fiscal third quarter is pegged at 39 cents, reflecting 105.26% year-over-year growth and an 11% increase from 35 cents per share in the past 60 days.

At present, Toro carries a Zacks Rank #2 (Buy).

Other Stocks to Consider

Some other stocks worth considering in the industrial products sector are ACCO Brands Corporation ACCO, Energous Corporation WATT and Powell Industries, Inc. POWL. While ACCO Brands sports a Zacks Rank #1 (Strong Buy), Energous and Powell Industries hold the same Zacks Rank as Toro.

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