Titan Machinery
(
TITN
) has a good history of positive earnings surprises and an
attractive valuation. The stock is a Zacks #1 Rank (Strong Buy).
Company Description
Titan Machinery Inc. owns and operates a network of full service
agricultural and construction equipment stores. It engages in the
sale of new and used equipment. The company sells new agricultural
and construction equipment manufactured under the CNH family of
brands as well as equipment from various other manufacturers. As of
August 01, 2011, its network consisted of 87 dealerships in North
Dakota, South Dakota, Iowa, Minnesota, Montana, Nebraska, Wyoming,
and Wisconsin. The company was founded in 1980 and headquartered in
West Fargo, North Dakota.
Five Consecutive Solid Earnings Beats
The last five earnings reports for Titan Machinery have been solid
ones as the company has beat the Zacks Consensus Estimate each
time. The biggest of the five beats was the April 2011 quarter
which saw the company report earnings per share of $0.40 which was
$0.18 ahead of expectations. That works out to a beat of 81% and
ended up moving the stock by more than 10%
The previous quarter was even better for the stock following a 58%
beat of the Zacks Consensus estimate of $0.36 per share. Earnings
of $0.57 were $0.21 better than expected. More recently, the
October 2011 quarter clocked in at $0.61 per share in earnings,
$0.11 ahead of the Zacks Consensus Estimate which translates into a
22% beat. The $0.61 mark was 45% ahead of the $0.42 posted in the
year ago period.
Crushing Topline Tops Expectations
The bottom line isn't the only stellar part of recent earnings
reports; the top line is beating estimates too. A wise investor
knows that companies that don't grow the top line need to have
costs move closer to zero for earnings growth. Earnings growth is
much more easily achieved when a company grows revenues. The $423
million posted in the October 2011 quarter was 36% ahead of the
year ago period. This is just what aggressive growth investors are
looking for, growth on the top and bottom lines.
Estimates Moving Higher
Analysts have been moving estimates higher for TITN over the last
several months. In November of 2011, analysts expected $1.87 in
earnings for 2012. That estimate was moved higher to $1.99 in
January 2012 and has ticked higher to its current level of $2.00.
Valuation
TITN trades at a small premium relative to the industry average in
terms of both trailing and forward PE. A 13.9x multiple for
trailing twelve months earnings is just higher than the 12.1x
multiple for the industry, while the forward multiple of 13.1x is a
little more than the 10.8x industry average. Price to book of 1.7x
shows TITN at a discount to the industry average of 2.3x. The price
to sales metric shows a significant discount to the industry
average with TITN with a 0.4x multiple and the industry average
holding at just shy of 0.8x for that metric.
The Chart
A look at the price and consensus chart shows how earnings estimate
expectations have risen over the last few years. Normally, when we
see the stock below the earnings lines, it implies the stock is
undervalued. A solid history of earnings beats added to the recent
momentum of bigger beats, coupled with a good valuation, makes TITN
just what aggressive growth investors are looking for.
Brian Bolan is an Aggressive Growth Stock Strategist for
Zacks.com.
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TITAN MACHINERY (
TITN
): Free Stock Analysis Report
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