Why Toro Shares Are Down This Week

Macroeconomic concerns weighed on results at Toro (TTC -10.58%)and investors are not waiting around for greener pastures.

Shares of Toro were down 12% for the week as of 1:30 a.m. ET Thursday, according to data from S&P Global Market Intelligence, following news of the company’s most recent quarter.

A difficult operating environment

Toro makes equipment for lawn care and other outdoor tasks. The company earned $1.18 per share in the fiscal third quarter ended Aug. 2 on sales of $1.16 billion. That missed Wall Street consensus estimates of $1.18 a share on earnings of $1.26 billion.

Toro also cut 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 expected $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 an increased level of macro uncertainty to continue to drive caution in the near term.”

Is Toro Stock a Buy?

The Toro is well driven, but it’s hard to fight the cycle. A period of higher interest rates coupled with growing economic uncertainty is affecting home sales, which in turn is impacting demand for lawn care equipment.

The good news is that the excess inventory issues that plagued the company in previous quarters have now been resolved. If dealers see signs of increased demand for lawn equipment, they will likely want to fill their supply channels quickly, which could lead to a quick recovery 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, now is a good time to put Toro on their radar.