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Since The Toro Company (NYSE:TTC) released its earnings in October 2018, it seems that analyst forecasts are fairly optimistic, with profits predicted to increase by 16% next year relative to the past 5-year average growth rate of 12%. By 2020, we can expect Toro’s bottom line to reach US$315m, a jump from the current trailing-twelve-month of US$272m. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Toro in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
Exciting times ahead?
The longer term view from the 5 analysts covering TTC is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of TTC’s earnings growth over these next few years.
By 2022, TTC’s earnings should reach US$371m, from current levels of US$272m, resulting in an annual growth rate of 8.8%. This leads to an EPS of $3.54 in the final year of projections relative to the current EPS of $2.56. In 2022, TTC’s profit margin will have expanded from 10% to 12%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Toro, there are three essential aspects you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Toro worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Toro is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Toro? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.