Toro (US:TORO) Seeking Alphaยท2024-09-15 07:22Company Overview - The Toro Company (NYSE:TTC) specializes in lawn care products and solutions, operating in two segments: professional and residential [2] - The company has a market capitalization of approximately $8.5 billion and has delivered nearly 8,500% return since its public offering [2] Financial Performance - Revenue per share has grown at an 8.6% CAGR over the past ten fiscal years, with notable increases in 2019, 2021, and 2022, all exceeding 15% [3] - In fiscal 2023, revenue per share saw only a minor increase, prompting attention on fiscal 2024 for potential recovery [3] - Gross profit margin fluctuated but returned close to 35% in 2023 after a decline [3] - Return on invested capital (ROIC) has decreased from pre-pandemic levels near 30% to 18.7% in 2023 [3] Dividend Information - Toro has paid dividends for over 30 years, with a current quarterly dividend of $0.36, yielding about 1.75% [4] - The company has a strong commitment to dividend growth, with 3-, 5-, and 10-year growth rates all exceeding 10% [4] Earnings Update - For Q3, Toro reported revenue of $1.16 billion, a nearly 7% increase year-over-year, but missed analyst expectations by over $100 million [6] - Adjusted EPS for the quarter was $1.18, up more than 24% from the previous year, but also fell short of estimates [6] - The Professional segment experienced a slight sales decline of 1.7%, while the Residential segment saw revenue increase by over 50% [6] Valuation - Toro's stock is currently trading at about $83, below its fair value estimate of $108, indicating a potential buying opportunity [8] - The expected rate of return for Toro is just above 16%, driven by anticipated earnings growth and dividend yield [8] - The valuation model suggests that Toro is trading slightly below fair value, with a recent drop in stock price providing a better margin of safety for investors [7][8]