Titan Machinery (TITN) AI Stock Analysis

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Titan Machinery

(NASDAQ:TITN)

47Neutral

Titan Machinery faces substantial financial challenges with negative profitability and cash flow issues. Technical indicators provide some support, but the valuation is unattractive due to negative earnings. The earnings call added to the concerns with weak demand outlooks and increased losses. The overall score reflects significant operational and financial risks.

Positive Factors

Earnings

Revenue of $760M beat estimates behind an aggressive inventory reduction strategy.

Inventory Management

The company's well-considered inventory reduction strategy provides optimism for the FY27+ outlook.

Negative Factors

Financial Performance

Depressed gross margins and elevated interest expense will keep the company from realizing a level of profitability which would justify a materially higher valuation until at least FY27.

Market Conditions

Management noted incremental weakening in both Europe and Australia due to unusually dry conditions.

Market Demand

The bleak outlook for agricultural equipment demand is at the root of the meaningful valuation discount that TITN is experiencing.

Titan Machinery (TITN) vs. S&P 500 (SPY)

Market Cap

$365.12M

Dividend YieldN/A

Average Volume (3M)327.13K

Price to Earnings (P/E)11.1

Beta (1Y)1.11

Revenue Growth-2.04%

EPS Growth-133.17%

CountryUS

Employees3,338

SectorIndustrials

Sector Strength61

IndustryIndustrial - Distribution

Share Statistics

EPS (TTM)-1.63

Shares Outstanding23,123,573

10 Day Avg. Volume294,584

30 Day Avg. Volume327,133

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.14

Price to Cash Flow (P/CF)-11.20

P/FCF Ratio18.60

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$19.33

Price Target Upside22.42% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering4

Titan Machinery Business Overview & Revenue Model

Company DescriptionTitan Machinery Inc. is a leading dealership group in North America, specializing in the sale and service of agricultural and construction equipment. The company operates a network of full-service stores, offering a wide range of machinery from prominent brands such as Case IH, Case Construction, New Holland Agriculture, and New Holland Construction. Titan Machinery provides comprehensive sales and after-sales support, including parts, maintenance, and repair services, catering to the needs of farmers, contractors, and other equipment users.

How the Company Makes MoneyTitan Machinery makes money primarily through the sale of new and used agricultural and construction equipment. The company's revenue streams also include the provision of repair and maintenance services, which generate income from labor charges and parts sales. Additionally, Titan Machinery benefits from equipment rental services, allowing customers to rent machinery for short-term use. Financial services, such as equipment financing and insurance, further contribute to the company's earnings. Strategic partnerships with leading equipment manufacturers enable Titan Machinery to offer a diverse and competitive product lineup, enhancing its market position and revenue potential.

Titan Machinery Financial Statement Overview

Summary

Titan Machinery's financial performance is challenged by declining profitability, negative net income, and inconsistent revenue growth. Improvements in leverage are positive, but persistent negative cash flow and operational inefficiencies pose risks.

Income Statement

Neutral

Titan Machinery's income statement reveals challenges in maintaining profitability with a decline in gross profit margin from 19.26% in 2024 to 14.42% in TTM, coupled with a significant drop in net income to a loss of $36.91M. Revenue growth was inconsistent, falling by 2.04% from 2024 to TTM. Despite historical revenue growth, the company faces pressure on profitability margins, notably with an EBIT margin of 0.15% and a TTM net profit margin of -1.37%.

Balance Sheet

Neutral

The balance sheet indicates mixed financial health. The debt-to-equity ratio improved to 0.069 in TTM from 1.64 in 2024, reflecting reduced leverage and a stronger equity position. However, the equity ratio decreased slightly from 32.99% in 2024 to 33.85% in TTM. Return on equity (ROE) dropped significantly, suggesting challenges in generating returns on shareholder investments. Stability is underlined by a healthier debt profile, but profitability concerns persist.

Cash Flow

Negative

Cash flow analysis highlights substantial operational challenges with negative operating cash flow of $56.19M in TTM. Free cash flow remains negative, showing limited capacity for self-financed growth. The operating cash flow to net income ratio is alarming, indicating inefficiencies in cash management. Although financing activities provided cash inflow, reliance on external funding is notable.

TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Breakdown
Income Statement		Total Revenue
2.70B	2.76B	2.21B	1.71B	1.41B	1.31B
	Gross Profit
389.63M	531.35M	439.84M	332.72M	261.36M	250.82M
	EBIT
4.01M	168.84M	138.32M	90.18M	37.41M	21.33M
	EBITDA
35.79M	200.32M	167.38M	124.63M	73.17M	64.16M
	Net Income Common Stockholders
-36.91M	110.92M	101.87M	66.05M	19.36M	13.95M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
66.00M	38.07M	43.91M	146.15M	78.99M	43.72M
	Total Assets
609.36M	1.99B	1.19B	946.67M	815.79M	975.34M
	Total Debt
354.55M	1.08B	413.93M	281.26M	296.67M	523.99M
	Net Debt
288.54M	1.04B	370.02M	135.11M	217.68M	480.26M
	Total Liabilities
405.86M	1.33B	652.39M	511.47M	444.51M	630.24M
	Stockholders Equity
203.50M	657.64M	536.31M	435.20M	371.28M	345.10M
Cash Flow		Free Cash Flow
-86.99M	-94.64M	-26.39M	121.29M	152.91M	-24.06M
	Operating Cash Flow
-56.20M	-32.28M	10.82M	158.92M	173.00M	955.00K
	Investing Cash Flow
-29.44M	-163.37M	-134.06M	-55.20M	-20.30M	-36.47M
	Financing Cash Flow
163.05M	188.58M	21.96M	-35.34M	-117.94M	22.87M

Titan Machinery Technical Analysis

Technical Analysis Sentiment

Negative

Last Price15.79

Price Trends

50DMA

16.91

Negative

100DMA

15.81

Negative

200DMA

15.33

Negative

Market Momentum

MACD

0.27

Negative

RSI

53.42

Neutral

STOCH

71.55

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TITN, the sentiment is Negative. The current price of 15.79 is below the 20-day moving average (MA) of 15.90, below the 50-day MA of 16.91, and above the 200-day MA of 15.33, indicating a bearish trend. The MACD of 0.27 indicates Negative momentum. The RSI at 53.42 is Neutral, neither overbought nor oversold. The STOCH value of 71.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TITN.

Titan Machinery Risk Analysis

Titan Machinery disclosed 30 risk factors in its most recent earnings report. Titan Machinery reported the most risks in the “Production” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Titan Machinery Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
KMTUY	77 Outperform	$23.02B	8.73	13.15%	3.55%	-1.87%	-6.15%
DE	74 Outperform	$114.90B	18.76	27.91%	1.50%	-20.93%	-34.33%
OSK	68 Neutral	$5.27B	7.88	17.34%	2.31%	11.36%	13.78%
Sector *	62 Neutral	$7.67B	13.25	3.04%	3.47%	3.63%	-13.99%
TWI	53 Neutral	$422.16M	―	-1.15%	―	1.32%	-104.92%
AGCO	52 Neutral	$5.84B	46.40	-10.11%	1.48%	-19.08%	-136.41%
TITN	47 Neutral	$365.12M	11.08	-5.81%	―	-2.04%	-133.17%

* Industrials Sector Average

Performance Comparison

TITN

Titan Machinery

15.79

-7.52

-32.26%

AGCO

Agco

85.81

-35.28

-29.14%

Deere

452.59

46.65

11.49%

OSK

Oshkosh

89.05

-33.08

-27.09%

TWI

Titan International

7.16

-4.93

-40.78%

KMTUY

Komatsu

25.72

-3.84

-12.99%

Titan Machinery Earnings Call Summary

Earnings Call Date: Mar 20, 2025 | % Change Since: 7.20% | Next Earnings Date: May 22, 2025

Earnings Call Sentiment Negative

The earnings call highlighted significant progress in inventory reduction and growth in the service business, but was overshadowed by revenue declines, increased net losses, and challenging demand projections for fiscal 2026.

Highlights

Significant Inventory Reduction

Titan Machinery achieved a $304 million sequential decrease in inventory in the fourth quarter, bringing the total reduction to $419 million since inventories peaked in fiscal Q2.

Service Business Growth

The domestic ag segment saw continued growth in the service business, resulting in an 8.2% increase in same-store sales for the full year.

Construction Segment Outlook

The construction segment finished the year relatively flat compared to fiscal 2024, with optimism for multi-year growth due to housing shortages and federal infrastructure support.

European Segment Stability

Despite challenging conditions, the European segment saw a 6.1% sales increase in the fourth quarter, with expectations for modest growth in fiscal 2026.

Lowlights

Revenue Decline and Margins Pressure

Total revenue for the fourth quarter was $759.9 million, a 12% decrease from the prior year. Gross profit decreased significantly from $141 million to $51 million, with margins impacted by lower equipment demand and inventory reduction measures.

Adjusted Net Loss

Adjusted net loss for the fourth quarter was $44.9 million or $1.98 per diluted share, compared to net income of $24 million or $1.05 per share in the prior year.

Agriculture Segment Challenges

The agriculture segment saw a 13.8% sales decrease in the fourth quarter, with an adjusted pre-tax loss of $56.3 million due to softer demand and inventory reduction efforts.

Expected Lower Demand for Fiscal 2026

Revenue is expected to decline across several segments in fiscal 2026, including a 20-25% decrease in domestic ag segment revenue, a 5-10% decline in construction, and a 15-20% decrease in Australia.

Interest Expense and Debt

Floor plan and other interest expenses increased year-over-year, with $385 million in interest-bearing inventory. The adjusted debt to tangible net worth ratio was 1.8 times.

Company Guidance

In the recent call, Titan Machinery provided guidance for fiscal year 2026, highlighting several key metrics. The company aims for a $100 million additional reduction in inventory following a significant decrease of $419 million in fiscal 2025. Expectations for fiscal 2026 include a 20-25% decline in domestic agriculture segment revenue, a 5-10% decrease in the construction segment, flat to 5% growth in Europe, and a 15-20% decline in Australia. Equipment margins are projected to improve slightly to 7.7%, with operating expenses decreasing to approximately 17.3% of sales, reflecting a $380 million total. Floor plan interest expense is expected to decline by 15-20%, and the company anticipates an adjusted loss of $1.25 to $2 per diluted share for the year.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.