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Titan International Lowered to Strong Sell

TWI DE BGG

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Zacks Investment Research downgraded Titan International Inc. (TWI - Snapshot Report) to a Zacks Rank #5 (Strong Sell) on March 1, 2013.

Why the Downgrade?

Despite reporting its record annual results on February 25, 2013, a lackluster fourth quarter performance resulted in negative sentiments for Titan International, and hence, the earnings for the company witnessed a sharp fall. The Zacks Consensus Estimate for 2013 went down by 6.7% to $2.51 per share while that for 2014 plummeted 12.7% to $2.88 per share.   

Titan International reported adjusted earnings per share of 9 cents, down compared with 37 cents reported in the year-ago quarter and 80.9% below the Zacks Consensus Estimate of 47 cents.

Revenue of $493.6 million represented a 22.5% improvement over the year-ago quarter. The impact was, however, negated by a 28.4% increase in cost of sales that led to a12.0% fall in gross profit.

Gross margin came down by 410 basis points over the year-ago quarter. Along with this, the results also suffered due to an increase in selling, general, and administrative, research and development, interest and tax expenses.

Decreasing earnings estimates together with two quarters of both positive and negative earnings surprise, with an average of -9.6%, raises skepticism over Titan International’s performance in the quarters ahead. For 2013, we have an Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of -4.8%.

Other Stocks to Consider

Other stocks to watch out for in the industry are Briggs & Stratton Corporation (BGG - Snapshot Report), CNH Global NV and Deere & Company (DE - Analyst Report), each holding a Zacks Rank #2 (Buy).

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