It's shaping up to be a tough period for Titan Machinery Inc. (NASDAQ:TITN), which a week ago released some disappointing first-quarter results that could have a notable impact on how the market views the stock. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at US$629m, statutory earnings missed forecasts by an incredible 33%, coming in at just US$0.41 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the consensus forecast from Titan Machinery's four analysts is for revenues of US$2.91b in 2025. This reflects an okay 3.4% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to tumble 45% to US$2.27 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$2.99b and earnings per share (EPS) of US$3.22 in 2025. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.
The consensus price target fell 13% to US$27.60, with the weaker earnings outlook clearly leading valuation estimates. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Titan Machinery, with the most bullish analyst valuing it at US$33.00 and the most bearish at US$18.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Titan Machinery's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 4.5% growth on an annualised basis. This is compared to a historical growth rate of 18% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.7% annually. Factoring in the forecast slowdown in growth, it seems obvious that Titan Machinery is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Titan Machinery. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Titan Machinery's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Titan Machinery. Long-term earnings power is much more important than next year's profits. We have forecasts for Titan Machinery going out to 2027, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 3 warning signs for Titan Machinery (of which 2 are a bit concerning!) you should know about.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.