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Why Titan Machinery (TITN) Stock Is Up Today

Stocks in this article: TITN

NEW YORK (TheStreet) -- Titan Machinery (TITN) is up 13.7% to $17.97 in trading Thursday.

The jump follows the agricultural and construction equipment store's premarket release of its fiscal fourth quarter and full year earnings report.

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The company beat Capital IQ fourth quarter EPS estimates of 20 cents per share by 15 cents, reporting an EPS of 35 cents for the quarter.

However, fourth quarter revenue was down 9.7% to $708.6 million from $784.5 million the previous year. Gross profits for the fourth quarter ending January 31 were also down to $97 million from $104.5 million.

Company guidance for fiscal year 2015 included an EPS range of 70 cents - $1, in line with consensus estimates of 92 cents. Revenue guidance for 2015 fell below estimates with a range of $1.95 - $2.15 billion while analysts estimates are $2.22 billion.

TheStreet Ratings team rates TITAN MACHINERY INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate TITAN MACHINERY INC (TITN) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.4%. Since the same quarter one year prior, revenues slightly increased by 1.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is very high at 2.85 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.22, which clearly demonstrates the inability to cover short-term cash needs.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Trading Companies & Distributors industry and the overall market, TITAN MACHINERY INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • You can view the full analysis from the report here: TITN Ratings Report
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