Toro Q2 Earnings Exceed Expectations, Shares Down 5.6% YTD

Toro (TTC) reported Q2 earnings of $1.42 per share, beating the Zacks Consensus Estimate of $1.38 per share. Revenues were $1.32 billion, missing the Zacks Consensus Estimate by 1.94%. The company's shares have lost about 5.6% since the beginning of the year, while the S&P 500 has gained 1.5%. Toro's earnings outlook is mixed, translating into a Zacks Rank #3 (Hold) for the stock.

Toro (TTC), a leading provider of outdoor power equipment and lawn care solutions, reported its Q2 FY25 earnings on Thursday, June 5th. The company announced a non-GAAP EPS of $1.42, beating the Zacks Consensus Estimate of $1.38 per share. However, revenues of $1.32 billion missed the Zacks Consensus Estimate by $30 million, or 1.94%. The company's shares have lost about 5.6% since the beginning of the year, while the S&P 500 has gained 1.5%.

The residential segment sales decreased by 11.4% year-over-year (Y/Y) to $297.4 million, primarily due to lower shipments of walk power mowers, zero-turn mowers, and portable power products. The professional segment sales increased by 0.8% Y/Y to $1.014 billion, driven by higher shipments of golf and grounds products. However, this was partly negated by a decline in underground and specialty construction product shipments and the prior year's construction equipment dealer divestitures.

Adjusted gross margin for the quarter decreased to 33.4% from 33.6% last year, impacted by higher material and manufacturing costs, along with inventory valuation adjustments. Adjusted operating margin for the quarter was 13.7%, down from 14.2% in the same period last year.

The company lowered its full-year adjusted EPS outlook to $4.15-$4.30, compared to the previous estimate of $4.25-$4.40, and the net sales growth outlook to flat to -3%, compared to 0% to 1%. Richard M. Olson, chairman and chief executive officer, stated, "We are taking decisive steps to strategically position the company to navigate near-term headwinds."

The Zacks Rank for Toro has been downgraded to #3 (Hold) due to the mixed earnings outlook and the lowered full-year guidance.

References:
[1] https://seekingalpha.com/news/4455431-toro-q2-2025-earnings-preview
[2] https://www.benzinga.com/markets/earnings/25/06/45796329/toro-lowers-full-year-outlook-as-residential-sales-slump-costs-weigh-on-margins
[3] https://seekingalpha.com/news/4455822-toro-non-gaap-eps-of-1_42-beats-by-0_02-revenue-of-1_32b-misses-by-30m