Q: What’s your view on Toromont earnings today? Is the drop in share price an opportunity to buy?
5i Research Answer:
TIH is trading at 19x Forward P/E, with historical averages ranging from 17.6x to 25x. In the 1Q, TIH revenue declined -3% to $1.02B, missing estimates of $1.08B and EPS was $1.01, missing estimates of $1.13. The balance sheet is strong, with a net cash of $308M. Despite the decline in revenue, TIH’s management indicates the activity levels remain solid with healthy bookings and backlog across the business. The operating metrics look good, and we don’t think anything has fundamentally changed with TIH’s business, except just a weak quarter in general. We are okay to add some here.