Bear of the Day: Titan International (TWI) - Bear of the Day
21 Agosto 2013 - 12:31PM
Zacks
Titan International Inc. (TWI) continues to suffer from a
build-up in tire inventory in the farm and construction industry.
This Zacks Rank #5 (Strong Sell) is expected to see a double digit
earnings decline in 2013 on tough market conditions.
Titan International supplies wheels, tires and
assemblies for off-highway equipment used in agriculture and
earthmoving/construction.
When agriculture and mining was booming, tire sales
were too. In 2011, the farmers took home record income and Titan's
earnings jumped 253%.
But excess inventory that has been dropped into the
aftermarket from the farm, construction and mining industries has
impacted pricing.
Titan Posts Big Second Quarter Earnings
Miss
On July 24, Titan reported second quarter results
and missed on the Zacks Consensus by 49%. Earnings were 24 cents
compared to the Zacks Consensus Estimate of 47 cents.
It was Titan's third big miss in the a row even
though it had warned on the year in June.
Sales rose 29.2% to $593.3 million but the North
American construction market saw volumes decrease 25% due to soft
construction trends.
Titan is scheduled to close on the acquisition of
Voltyre-Prom, a Russian industrial and agriculture tire producer,
no later than Sep 1, 2013. It's expected to increase Titan's reach
into the CIS region.
Titan is expected to see record revenue in the
second half of 2013 due to acquisitions but earnings estimates are
still sliding due to tire market conditions.
4 estimates have been cut since the earnings report
for 2013. The 2013 Zacks Consensus Estimate has fallen to $1.24
from $1.66 in the last month.
That is an earnings decline of 35.6% compared to
2012.
Shares Hit 52-Week Low
Titan sold off this summer on the guidance cut and
the earnings miss. Shares recently hit 52-week lows.
With earnings estimates still on the decline, it's
hard to tell if it's actually cheap or not. It trades with a
forward P/E of 13.2.
For investors looking for agriculture and
construction plays, you may want to consider CNH Global
(CNH) which makes the machinery in both of those areas. It isn't
beholden to the tire market as it makes the equipment itself. It is
a Zacks Rank #2 (Buy).
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Tracey Ryniec is the Value Stock Strategist for Zacks.com.
She is also the Editor of the Turnaround Trader and Value Investor
services. You can follow her on twitter at @TraceyRyniec.
CNH GLOBAL NV (CNH): Free Stock Analysis Report
TITAN INTL INC (TWI): Free Stock Analysis Report
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