TTC – Market expectations are for Uniform ROA to reach new peaks, but management may be concerned about their initiatives, demand, and mower shipment

• The Toro Company (TTC:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 26.9x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about their productivity and synergy initiatives, landscape contractor demand, and mower shipment improvements
• Specifically, management may lack confidence in their ability to meet their 3-year net sales targets, further execute their productivity and synergy initiatives, and sustain EPS growth. Furthermore, they may have concerns about municipal ground equipment spending constraints and the sustainability of landscape contractor demand, and they may be exaggerating the strength of their current liquidity position. Finally, management may lack confidence in their ability sustain incremental shipment improvement of their zero-turn riding and walk power mowers