Investopedia: Toro And The Runaway Recovery

Wall Street is always looking for a rebound play, and there has been no shortage of interest in going long on the housing/consumer recovery this year. While data from home improvement superstores like Home Depot (NYSE:HD) and Lowe's (NYSE:LOW) does indeed support the idea that the worst has passed, investors have been pretty aggressive in bidding up many residential housing plays. Toro (NYSE:TTC) remains a top-notch manufacturing company, but absent a buyout bid, it seems hard to see how cash flow is going to grow fast enough to leave much upside on the table for today's buyers.

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Investopedia: Toro Not Exactly A Charging Bull

Lawn and turf care specialist Toro (NYSE:TTC) arguably could have picked a better time to focus on improving its cost structure and working capital requirements, as the turbulence in the housing market and overall economy had a big negative impact on equipment sales. Although the company still has low margins and a modest sales growth outlook, the company generates a fairly compelling stream of cash flow. Nevertheless, it does not leap out as a great buy candidate today.

A Good Quarter, but Does Anybody Care? 

Toro delivered a solid quarter, at least in respect to expectations. Revenue rose 9%, as the larger professional segment (up less than 6%) was boosted by the nearly 13% growth of the residential business. Toro easily topped out above the high end of Wall Street expectations, but this is not an especially well-followed stock.

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Investopedia: Lowe's Still Seeing Only Slow Progress

Investors don't need to wait until Lowe's (NYSE:LOW) or Home Depot (NYSE:HD) report earnings to know that the housing and big-ticket consumer spending environments are tough. The news is still full of stories about the high rate of foreclosures, the low rates of housing starts and the ongoing discrepancy between the recovery that large corporations are seeing and the recovery that individual consumers are experiencing.


A Tough, Disappointing Start to the Year
Lowe's started the fiscal year by missing on both its top and bottom line numbers. Revenue dropped 1.6% this quarter, coming in about 3% lower than analysts expected and below even the lowest published estimate. Poor top line performance was fueled by disappointing comps - down 3.3% from last year's level. While weather certainly played a role, weather is a convenient excuse for retailers; funny how weather never seems to keep shoppers from places like Lululemon Athletica (Nasdaq:LULU).


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