The Toro Company TTC reported fourth-quarter fiscal 2024 results, wherein both the top and bottom lines lagged the Zacks Consensus Estimate. However, both revenues and earnings increased from the year-ago quarter’s reported figures.

The company's strength in its portfolio and effective execution by its team and partners resulted in net sales improvements in both the Professional and Residential segments. Toro also enhanced profitability through productivity gains and net price benefits, offsetting inflation and production adjustments.

In the fiscal fourth quarter, careful expense control and enhanced productivity offset the impact of a higher proportion of lower-margin products, enabling the company to achieve adjusted earnings in line with expectations.

More on Toro’s Q4 Results

Toro, currently carrying a Zacks Rank #3 (Hold), has reported adjusted earnings of 95 cents per share, lagging the Zacks Consensus Estimate of 96 cents. However, the bottom line increased from adjusted earnings of 71 cents in the year-ago period.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Net sales of $1,076 million missed the consensus estimate of $1,086 million. However, the top line improved 9.4% from the year-ago quarter.

Insight Into TTC’s Margins & Expenses

Adjusted Gross profit increased 5.1% year over year to $347.8 million in the fiscal fourth quarter. We note that the gross margin contracted 130 basis points (bps) year over year to 32.3%. The decline was driven by increased costs for materials, freight and manufacturing, partially mitigated by productivity enhancements.

SG&A expenses improved 2.1% year over year to $240 million. As a percentage of net sales, this metric decreased 160 bps year over year to 22.3%. This was largely attributed to net sales leverage, reduced incentive compensation and lower marketing expenses, partially offset by increased warranty costs.

Adjusted operating earnings were $117 million in the fiscal fourth quarter compared with $99.5 million in the year-earlier quarter. We note that the adjusted operating margin was 10.9%, up 80 basis points year over year.

Toro’s Segment Wise Sales Insight

Net sales in the Professional segment for the fiscal fourth quarter reached $913.9 million, a 10.3% increase from $828.9 million in the same period last year. This growth was driven by increased shipments of golf and grounds products, as well as underground construction equipment, combined with net price realization. These gains were partially offset by lower shipments of compact utility loaders and snow and ice management products.

The Residential segment reported net sales of $155.1 million, a 4.5% rise from $148.4 million in the prior-year period. The increase was driven by greater shipments of lawn care products to the mass channel, partially offset by decreased snow product shipments and increased sales promotions.

The Zacks Consensus Estimate for the net sales of the Professional and Residential segments was pegged at $930 million and $144.5 million, respectively, in the fiscal fourth quarter.

TTC Stock Past Three-Month Performance

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TTC’s Financial Snapshot: Cash, Inventory & Equity Overview

TTC ended the fiscal fourth quarter with cash and cash equivalents of $199.5 million, long-term debt of $911.8 million and shareholders' equity of $1.55 billion. Net inventories declined 4.5% on a year-over-year basis. As of Oct. 31, 2024, net cash provided by operating activities was $569.9 million and free cash flow was $470.7 million.

Toro’s FY25 Guidance

The company projects fiscal 2025 net sales growth of 0% to 1% and adjusted EPS of $4.25 to $4.40. Growth will be supported by strong demand in underground construction and golf and grounds segments, with order backlogs expected to normalize by year end. While field inventories for lawn care and snow products remain high, the company is better positioned for the upcoming seasons. TTC shares have lost 4.1% in the past three months against the industry’s 14.7% growth.

Stocks to Consider

Some better-ranked stocks are Snap-on Incorporated SNA, Gildan Activewear Inc. GIL and Steven Madden, Ltd. SHOO.

Snap-on is a global provider of professional tools, equipment and related solutions for technicians, vehicle service centers, original equipment manufacturers and other industrial users. It presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Snap-on’s 2024 earnings indicates growth of 3% year over year. SNA has a trailing four-quarter average earnings surprise of 1.6%.

Gildan Activewear is a manufacturer and marketer of premium quality branded basic activewear. It has a Zacks Rank of 2 at present.

The Zacks Consensus Estimate for Gildan’s current financial year earnings and sales indicates growth of 15.6% and 1.5%, respectively, from the 2023 reported levels. GIL has a trailing four-quarter average earnings surprise of 5.4%.

Steven Madden designs, sources, markets and sells fashion-forward name-brand and private-label footwear. It currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 8.6% and 13.6%, respectively, from the year-ago reported actuals. SHOO has a trailing four-quarter average earnings surprise of 9.8%.

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