Bear of the Day: Titan Machinery (TITN)

by

April 19, 2013 |

The record setting days for the big machinery sellers are over. Recently, Titan Machinery Inc. (TITN - Snapshot Report) missed the Zacks Consensus Estimate for its fiscal fourth quarter by 20%.

The agriculture and construction equipment industry is facing a tough 2013. Farmers are still recovering from last year's drought and the construction segment, while improving, is only slowly coming off the mat. Fiscal 2014 estimates have been cut. Titan has fallen to a Zacks Rank #5 (Strong Sell).

Titan Machinery doesn't make the equipment, it simply sells it at 106 dealerships in the United States and 14 in Europe. It sells the CNH Brands, which is owned by Fiat, including CaseIH, New Holland Agriculture, Case Construction, New Holland Construction Kobelco and CNH Capital.

Big Miss in the Fiscal Fourth Quarter

On Apr 10, Titan reported its fiscal fourth quarter results and missed the Zacks Consensus by 18 cents. It was the third miss in the last four quarters.

The agriculture segment appears to be on its way to a recovery from last year's drought. Titan said it performed well in the fourth quarter. However, it was the construction business which wasn't quite so great as it still faced "difficult industry conditions."

Guidance Below Consensus

Titan provided full year Fiscal 2014 guidance of $2.00 to $2.30. This was well below the Zacks Consensus of $2.62.

Not surprisingly, 5 estimates have been cut since the earnings report which has pushed the Zacks Consensus down to $2.19.

Shares got pummeled on the report.

Some analysts believe this is a buying opportunity for long-term investors. Remember, the Zacks Rank is a short-term recommendation of 1 to 3 months. So in the short term, according to the Zacks Rank, Titan is a Strong Sell.

However, if you'd still like to be in this sector and you want to buy right now, you might want to consider buying the brands that Titan sells. CNH Global (CNH) is a Zacks Rank #2 (Buy).

Want More of Our Best Recommendations?

Zacks' Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Then each week he hand-selects the most compelling trades and serves them up to you in a new program called Zacks Confidential.

Learn More>>

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.

Email Print Share Rate Pos Rate Neg