The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how The Toro Company (NYSE:TTC) and the rest of the agricultural machinery stocks fared in Q2.
Agricultural machinery companies are investing to develop and produce more precise machinery, automated systems, and connected equipment that collects analyzable data to help farmers and other customers improve yields and increase efficiency. On the other hand, agriculture is seasonal and natural disasters or bad weather can impact the entire industry. Additionally, macroeconomic factors such as commodity prices or changes in interest rates–which dictate the willingness of these companies or their customers to invest–can impact demand for agricultural machinery.
The 5 agricultural machinery stocks we track reported a disappointing Q2. As a group, revenues missed analysts’ consensus estimates by 4.8% while next quarter’s revenue guidance was 2% below.
Inflation progressed towards the Fed's 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
While some agricultural machinery stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 4.4% since the latest earnings results.
The Toro Company (NYSE:TTC) Ceasing all production to support the war effort during World War II, Toro (NYSE:TTC) offers outdoor equipment for residential, commercial, and agricultural use.
The Toro Company reported revenues of $1.16 billion, up 6.9% year on year. This print fell short of analysts’ expectations by 8.1%. Overall, it was a softer quarter for the company with a miss of analysts’ earnings estimates.
“Our team executed with discipline and delivered top- and bottom-line growth in a very dynamic environment,” said Richard M. Olson, chairman and chief executive officer.
The Toro Company delivered the weakest performance against analyst estimates of the whole group. Unsurprisingly, the stock is down 5.6% since reporting and currently trades at $85.90.
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Best Q2: Lindsay (NYSE:LNN) A pioneer in the field of center pivot and lateral move irrigation, Lindsay (NYSE:LNN) provides a variety of proprietary water management and road infrastructure products and services.
Lindsay reported revenues of $139.2 million, down 15.4% year on year, falling short of analysts’ expectations by 3.6%. The business performed better than its peers, but it was unfortunately a slower quarter with a miss of analysts’ organic revenue estimates.
The market seems happy with the results as the stock is up 7.5% since reporting. It currently trades at $121.72.
Weakest Q2: Alamo (NYSE:ALG) Expanding its markets through acquisitions since its founding, Alamo (NSYE:ALG) designs, manufactures, and services vegetation management and infrastructure maintenance equipment for governmental, industrial, and agricultural use.
Alamo reported revenues of $416.3 million, down 5.5% year on year, falling short of analysts’ expectations by 2.9%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.
As expected, the stock is down 7.8% since the results and currently trades at $178.16.
AGCO Corporation (NYSE:AGCO) With a history that features both organic growth and acquisitions, AGCO (NYSE:AGCO) designs, manufactures, and sells agricultural machinery and related technology.
AGCO Corporation reported revenues of $3.25 billion, down 15.1% year on year. This number came in 6.8% below analysts' expectations. It was a disappointing quarter as it also logged full-year revenue guidance missing analysts’ expectations and underwhelming earnings guidance for the full year.
The stock is down 6.8% since reporting and currently trades at $95.10.
Titan International (NYSE:TWI) Acquiring Goodyear’s farm tire business in 2005, Titan (NSYE:TWI) is a manufacturer and supplier of wheels, tires, and undercarriages used in off-highway vehicles such as construction vehicles.
Titan International reported revenues of $532.2 million, up 10.6% year on year. This result missed analysts’ expectations by 2.8%. It was a softer quarter as it also produced a miss of analysts’ earnings estimates and revenue guidance for next quarter missing analysts’ expectations.
Titan International pulled off the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is down 9.2% since reporting and currently trades at $7.74.
This content was originally published on Stock Story
