Toro Co (NYSE:TTC) Q3 Earnings Beat Estimates, Revenue Misses Amid Residential Segment Weakness

The Toro Company (NYSE:TTC) reported fiscal third-quarter results that presented a mixed financial picture, with adjusted earnings exceeding expectations while revenue fell short of analyst projections. The market reaction reflected this dichotomy, with shares declining approximately 3.8% in pre-market trading following the announcement.

Quarterly Performance Versus Estimates

The company reported Q3 2025 revenue of $1.13 billion, representing a 2% decrease compared to the same period last year. This figure came in below analyst expectations of $1.17 billion. Despite the revenue shortfall, Toro demonstrated improved profitability on an adjusted basis.

Key financial metrics for the quarter include:

• Adjusted EPS: $1.24 versus estimates of $1.23
• Reported EPS: $0.54, impacted by significant one-time charges
• Professional segment sales: $930.8 million, up 5.7% year-over-year
• Residential segment sales: $192.8 million, down 27.9% year-over-year

Segment Performance Divergence

The company's two main segments showed dramatically different trajectories during the quarter. The Professional segment delivered strong results with 6% growth and 250 basis points of margin expansion, driven by underground construction and golf and grounds businesses. This strength was overshadowed by significant challenges in the Residential segment, where demand softened due to increased homeowner and channel caution amid macroeconomic pressures.

Updated Fiscal 2025 Outlook

Management provided updated full-year guidance, expecting both net sales and adjusted diluted earnings per share to be at the lower end of previous ranges. The company anticipates:

• Net sales to be flat to down 3%
• Adjusted diluted EPS of approximately $4.15

This outlook incorporates several factors:

• Reduced volume from macroeconomic factors affecting homeowner spending
• Continued strong demand in underground construction and golf and grounds businesses
• Anticipated tariff impacts
• Weather patterns aligned with historical averages for the remainder of the year

Strategic Initiatives and Productivity Gains

CEO Richard M. Olson emphasized the company's focus on productivity improvements through their AMP program, which is currently delivering $75 million in annualized savings with a target of at least $100 million by 2027. These efforts, combined with proactive tariff mitigation and strategic capacity alignment, position the company to deliver earnings growth independent of revenue expansion.

Market Reaction and Analysis

The pre-market stock decline appears to reflect investor concern over the revenue miss and reduced full-year guidance, particularly regarding the ongoing challenges in the Residential segment. However, the better-than-expected adjusted EPS and strong performance in professional markets suggest underlying operational strength that may provide stability once residential markets recover.

For investors seeking more detailed earnings information and future estimates, additional data is available through Toro's earnings and estimates page.

Disclaimer: This article provides financial analysis for informational purposes only and does not constitute investment advice, recommendation, or endorsement of any security. Readers should conduct their own research and consult with a qualified financial advisor before making investment decisions.