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.

Read our full report on The Toro Company here, it’s free.

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.