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Bull Of The Day: Titan Machinery (TITN)

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Titan Machinery (TITN - Free Report) is a Zacks Rank #1 (Strong Buy) and sports a Value and a Growth Style Score of A.  Now I like a growth play a lot better than a value play, but if the value players want to come along for the ride, the more the merrier!  

Let's take a look at TITN and how it became a Zacks Rank #! (Strong Buy) in this Bull of the Day article.

Description

Titan Machinery represents a diversified mix of agricultural, construction, and consumer products dealerships located in the upper Midwest. Their Shared Resource Headquarters is located in the heart of the Red River Valley in Fargo, ND. Titan Machinery is a dealer for Case IH, Case Construction, New Holland, and New Holland Construction. Titan Machinery also represents shortline equipment to meet specialized customer demand and niche product needs.

Recent Earnings

Part of what drives the Zacks Rank is the earnings history.  The thing that got this stock on my radar screen was the most recent report.  The company posted EPS of $0.28 when the Zacks Consensus was calling for $0.10.  That $0.18 beat translates into a positive earnings surprise of 180%.  

Beating the Zacks Consensus Estimate is something that TITN has done in each of the last four reports.  That last report was a monster, with a 180% positive surprise, but the others were big too.  The three preceding that report were +30%, +28% and +150% respectively.

Earnings Estimates

There is a lot going on when you look at the earnings estimates for TITN.  Some moves up, some moves down... it is not as cut and dry as you would hope for.  That might be keeping some investors out, but for those that believe this story, that makes this a great time to get in.

The best way to look at these numbers is through the detailed estimates page on the Zacks website : ( https://www.zacks.com/stock/quote/TITN/detailed-estimates) it will show you the movement of earnings estiamtes and a lot more.

Valuation

I have to admit, I don't fully understand the style scores and how they arrive at the grades they do, but at first glance I am worried about the forward PE. TITN trades around 28x forward estimates and 57x trailing numbers.  That is pretty stiff, but then the price to book at 1.2x is super low as in the 0.3x price to sales number.

I see operating and net margins improving over the last three quarters, and combine that with 11.5% top line growth and the story starts looking better and better.

Chart

 

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