Titan Machinery Inc. (TITN) has given investors plenty to sink their teeth into with its earnings report last week. Revenues and earnings were up, pushing estimates higher and valuations are looking great. So why aren’t investors scooping up shares?
Company Description
Titan Machinery owns several agricultural and construction equipment stores predominantly in the U.S., but does have 2 dealerships in Romania.
Beat Estimates
On Dec 9 Titan reported fiscal 2012 third-quarter results that showed a 36% rise in revenues, to $423 million. The company saw improvements in each of the 3 segments; equipment, parts, and service.
Net income jumped 66% to $12.8 million, from $7.7 million a year ago. Earnings per share worked out to $0.61, 11 cents higher than the Zacks Consensus Estimate and up 19 cents from last year.
Rising Expectations
In addition to the solid results, management went on to raise its revenue and earnings guidance. Analysts quickly did the same.
Forecasts for this fiscal year are averaging $1.84, an 18-cent increase since the earnings news. Next year’s average estimate is up 12 cents, to $1.99.
Given the $1.23 earned in fiscal 2011, the expected growth rates are no at 49% and 8%, respectively. The long-term growth rate is projected at 20%.
Trading at a Discount
Shares of TITN are priced to move here. With a forward P/E at only 12 times and a PEG ratio of 0.6, there is plenty of value. Furthermore, the price to sales is at 0.3 and the price to book is just 1.4. All of these metrics are showing a discount.
The Chart
Since the earnings release the stock has actually been trading a bit lower. TITN was up nicely on the report but some traders may have seen it as overbought and took profits. But, the earnings story should prevail and lead to higher prices for this Zacks #1 Rank (Strong Buy).
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service
