Titan Machinery Q3 Earnings: Can TITN Hit Its $0.48 EPS Target?

in EARNINGS/INVESTING IDEAS by

Titan Machinery Inc. (NASDAQGS:TITN) is scheduled to release financial results for the third quarter ended October 31, 2019, on Tuesday, November 26, 2019. The report will be followed by an investor conference call at 7:30 a.m. CT (8:30 a.m. ET).

The company is expected to report earnings of $0.48/share on revenue of $371.6 million. The consensus earnings per share (EPS) of $0.48/share is based on a poll of 4 analysts and represents a decline of -2.0% over the same quarter last year when the company reported earnings of $0.49/share.

The revenue forecast of $371.6 million based on a poll of 4 analysts implies a year-over-year (YoY) growth of 2.2%. Last year the company reported $363.6 million in revenue for the quarter.

Expected to report EPS decline of -$0.01/share for Q3, 2019
Metric Expected Prior Year YoY Change
Revenue $371.65 $363.65 2.2%
EPS $0.48 $0.49 -2.0%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters. What are your expectations from Titan Machinery for earnings this quarter? Let us know in the comments!

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.33 $0.31 -4.6% Missed
Q1, 2020 -$0.05 $0.02 NM Beat
Q4, 2019 $0.01 -$0.04 NM Missed
Q3, 2019 $0.36 $0.49 36.1% Beat
Q2, 2019 $0.12 $0.28 133.3% Beat
Q1, 2019 -$0.07 -$0.07 NM Beat
Q4, 2018 -$0.15 -$0.10 NM Beat
Q3, 2018 $0.08 $0.20 150.0% Beat

One question we always consider here at the Bankers’ Tribune is how important are earnings reports to Titan Machinery’s stock price performance? It’s more important for some companies than for others.

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending July 31, 2019, the stock price reacted by falling by -11.0%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-29 $16.93 $15.06 -11.0% Decline
2019-05-30 $15.08 $16.72 10.9% Increase
2019-03-27 $19.69 $15.61 -20.7% Decline
2018-11-29 $14.18 $17.53 23.6% Increase

Fundamentals And Technical Analysis

Titan Machinery is currently trading at $18.02/share, up 1.5% for the day. The company is trading at approximately 82.4% of its 52-week high of $21.88/share. The company’s stock price is up 19.7% since the last earnings report and up 1.5% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 66.02 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 28.5x and a forward P/E multiple of 21.0x. Titan Machinery’s current share price also implies a price-to-book (P/B) multiple of 1.2x. The following table summarizes some other key fundamental ratios:

Data as of November 25, 2019
Metric Value
Last Fiscal Period FY2020.Q2
Period End Date July 31, 2019
Stock Price (Current) $18.02
P/E Ratio 28.5x
P/E Ratio (Fwd) 21.0x
PEG Ratio 1.1
Total Debt to Capital (%) 60.6%
Levered Free Cash Flow $35.842 million
Enterprise Value / EBITDA 17.5x

Source: Finbox

Company Profile: Titan Machinery Inc.

Titan Machinery Inc. is a small-cap stock with a market capitalization of $390.3 million and a total enterprise value of $942.1 million. The company operates in the Industrials sector and Trading Companies & Distributors industry.

Titan Machinery Inc. owns and operates a network of full-service agricultural and construction equipment stores. It operates through three segments: Agriculture, Construction, and International. The company sells new and used equipment, including agricultural and construction equipment manufactured under the CNH Industrial family of brands, as well as equipment from various other manufacturers. Its agricultural equipment includes machinery and attachments for use in the production of food, fiber, feed grain, and renewable energy; and home and garden applications, as well as maintenance of commercial, residential, and government properties. The company’s construction equipment comprises of heavy construction machinery, light industrial machinery for commercial and residential construction, road and highway construction machinery, and mining operations equipment.

It also sells maintenance and replacement parts. In addition, the company offers repair and maintenance services that include warranty repairs, off-site and on-site repair services, scheduling off-season maintenance services, and notifying customers of periodic service requirements; and training programs to customers. Further, it rents equipment; and provides ancillary equipment support services.

The company operates in Arizona, Colorado, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, South Dakota, Wisconsin, and Wyoming, the United States; and Bulgaria, Germany, Romania, Serbia, and Ukraine, Europe.

Titan Machinery Inc. was founded in 1980 and is headquartered in West Fargo, North Dakota.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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