Could This Stock Be a Buying Opportunity as Large Caps Sell Off?

Toro just acquired Intimidator Group

Jan 21, 2022 at 12:42 PM
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 On Jan. 14, Toro Co (NYSE:TTC) -- an outdoor environment solutions company --announced that it completed the acquisition of Intimidator Group, which manufactures Spartan Mowers. Toro completed the purchase for $400 million, and expects that the acquisition will be moderately accretive to its fiscal 2022 adjusted earnings. 

The news sent TTC higher initially, but since then the equity has given in to the caprices of the broader market, falling to an annual high during today's trading. The security is now down 6% year-over-year, with solid pressure at the 100-day moving average keeping a lid on shares. Meanwhile, Toro offers a forward dividend of $1.20 with a dividend yield of 1.21%.

ttc jan 21

Short sellers, however, have been hitting the exits in droves. Short interest fell 20.5% in the last reporting period, and now makes up a slim 1.2% of the stock's available float, or a little under three days' worth of pent-up buying power. 

From a fundamental point of view, Toro stock has a relatively high valuation. TTC trades at a price-earnings ratio of 25.02 and a price-sales ratio of 2.58. Nonetheless, with large-cap companies now beginning to downtrend, an opportunity could potentially present itself in Toro stock. The outdoor solutions company offers steady long-term growth, having grown its revenues and net income both by 51% since fiscal 2018. TTC is also estimated to increase its earnings by 15.9% and its revenues by 5.3% next year. All combined, this makes Toro stock a decent option for investors searching for a company that operates in a largely irreplaceable market.

 

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