Titan International Inc.
) continues to suffer from a build-up in tire inventory in the farm
and construction industry and weak pricing. This Zacks Rank #5
(Strong Sell) is expected to see a 50% earnings decline in 2013 on
tough market conditions.
Titan International supplies wheels, tires and assemblies for
off-highway equipment used in agriculture and
When agriculture and mining was booming, tire sales were too. In
2011, the farmers took home record income and Titan's earnings
But excess inventory that has been dropped into the aftermarket
from the farm, construction and mining industries has impacted
Another Big Miss in Q3
On Oct 29, Titan reported third quarter results and missed for the
fourth quarter in a row.
It was another big miss of 11 cents, or 44%. Earnings were $0.14
compared to the Zacks Consensus of $0.25.
Gross profit fell to 12.6% of net sales, or $62.5 million, from
16.6% of sales, or $67.2 million, in the third quarter of 2012.
Agriculture held steady, but earthmoving and construction declined
again. Continuing decreases in raw material prices impacted
Titan expects tire prices to drop through the end of the year. The
mining companies are also expected to drop their tire inventory
from 14 months to 6 months and then buy what they use going forward
at lower prices.
On the bright side, Titan expects the smaller construction
businesses to expand 20-25% in 2014 based on information from the
Full Year Estimates Lowered Again
The analysts continue to see weakness in 2013 and are also
unsettled about 2014.
5 estimates were lowered for 2013 since the report pushing the
Zacks Consensus down to $0.93 from $1.28. That is an earnings
decline of 50% as Titan made $1.93 in 2012.
The analysts expect a small rebound in 2014, but 5 estimates have
also been cut in the last 30 days. The Zacks Consensus has fallen
Shares Near 52-Week Low
Shares have sunk to near 52-week lows over the prior five months as
the news out of the company hasn't improved with each quarterly
Still, it's not altogether "cheap" as it trades with a forward P/E
of 16.3 which puts it in line with the average of the S&P 500.
Titan is expected to announce management goals for 2014 sales in
the week of Dec 15. Stay tuned.
Right now, the farm machinery industry is a difficult place for
investors. It currently ranks 248 out of 265 in the Zacks Industry
Rank, or in the bottom 6.4%.
But if you must buy in this industry,
) is a Zacks Rank #3 (Hold). It's not beholden to the tire market
as it makes the machinery itself.
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