Next summer, if you find yourself running with the bulls in Pamplona, hopefully the animals chasing you will be as physically beaten down as Toro
Toro reported results for its fiscal third quarter yesterday that were ahead of analysts' estimates but still a far cry from last year's figures. Sales compared to the same quarter a year ago deteriorated in almost every segment. Consolidated revenues fell 20%, landing near $395 million. Net income fell by nearly half and sent diluted earnings down to $0.54 per share. Margins all fell substantially.
However, the news wasn't entirely bad. Toro's residential sales -- nearly a third of total revenue -- increased by a percentage point this quarter. Its home and garden products, which are sold to consumers through home-improvement stores like Home Depot
And eventually, Toro will return to greener pastures. Commercial spending on its professional equipment is down now, but it will likely pick up once the economy starts to recover. Meanwhile, management is reining in costs. Cash flow from operations has been solid, and with the help of Wells Fargo
Strong like bull
When spending resumes, all of the cost-cutting and working capital improvements will amount to a stronger Toro. Management is aiming to keep costs down as its top-line growth gains momentum. And while professional spending is stagnant now, the company believes that some of its largest customers -- golf courses and country clubs -- will go forward with their planned capital expenditures once a recovery begins.
Moreover, it isn't as if Toro is alone in its suffering. Competitor Deere
When all is said and done, shares in Toro are worth holding on to if management can successfully realize its vision. Even if you missed out on the buying opportunity presented by its second-quarter dip, Toro presents a good prospect for long-term investment.
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