What happened
Shares of construction and agricultural equipment manufacturer Titan Machinery (TITN 0.40%) collapsed after the company reported a big earnings and sales miss on Thursday. Wall Street had expected Titan to report $1.13 per share in adjusted earnings on sales of $684.4 million, but Titan actually reported only $0.81 per share (adjusted -- GAAP profits were $0.80 per share) on sales of $583 million.
As of 9:55 a.m. ET, Titan shares are down 22.2%.
So what
So how bad was this news exactly? It depends on your frame of reference. Viewed in isolation, fiscal Q4 2023 was kind of a disappointment.
Titan CEO David Meyer blamed supply chain problems -- "delayed new equipment shipments" -- for the fact that sales came in lighter than expected, rising only 15% year over year. With operating costs soaring 30%, that made it hard for profits to keep up, and indeed, earnings as calculated according to generally accepted accounting principles (GAAP) declined 19% year over year.
That said, if you zoom out and examine Titan's performance for the year as a whole, 2022 really wasn't a bad year. Sales grew 29% in comparison to 2021, hitting $2.2 billion. Net income hit a new record of $4.49 per share -- up 54% from 2021.
Now what
And the good news is that if supply chain snarls prevented Titan from selling all the equipment it had hoped to in Q4, it still expects to sell this equipment eventually. "We are carrying significant demand into fiscal 2024 and ... expect to catch up on the backlog as we progress throughout the year," said the CEO.
This year -- fiscal 2024 for Titan -- management sees construction equipment sales as being at least flat and perhaps up as much as 5%, with agricultural equipment sales doing much better -- up 20% to 25%. Total earnings should range from $4.50 per share to as high as $5.10 -- $4.80 at the midpoint, which implies about 7% growth for the year and suggests Titan is still on course to beat estimates (of $4.77 per share) for this coming year.
When you consider that this all values Titan stock at about 6.7 times current-year earnings, with a 7% growth rate, it actually looks a bit cheap after today's sell-off.
