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Tickers in this Article: TITN
Titan Machinery (TITN) delivered disappointing quarterly results on December 5. Since then, analysts have slashed their estimates for both this year and next, sending the stock to a Zacks Rank of 5 (Strong Sell).It was also Titan's third earnings miss in four quarters. Investors should consider avoiding this stock until its earnings momentum improves.Titan Machinery owns and operates agricultural and construction equipment stores. It has a network of 105 North American dealerships in North Dakota, South Dakota, Iowa, Minnesota, Montana, Nebraska, Wyoming, Wisconsin, Colorado, Arizona, and New Mexico. It also has 14 European dealerships in Romania, Bulgaria, Serbia, and Ukraine. The Titan Machinery dealerships represent one or more of the CNH Industrial brands.Third Quarter ResultsTitan Machinery reported its fiscal 2014 third quarter results on December 5. Earnings per share came in at 27 cents, well below the Zacks Consensus Estimate of 50 cents. It was a -59% decrease from the same quarter last year.Revenue actually rose 1% year-over-year due largely to higher service and parts sales. However, 'Agriculture' revenue fell 4% as same-store sales dropped 6.5%. Management noted "pricing pressure" in the industry.Gross profit declined from 16.2% to 15.9% of revenue. Meanwhile, operating expenses increased 17%, leading to a -38% drop in operating income. Estimates FallingFollowing the Q3 miss, CEO David Meyer stated that "[b]ased on our year to date results and the various headwinds we are facing, we are reducing our revenue, net income, and earnings per share expectations for fiscal 2014." This prompted analysts to unanimously revise their estimates lower for both fiscal 2014 and 2015. This sent the stock to a Zacks Rank #5 (Strong Sell).The Zacks Consensus Estimate for 2014 is now $0.62, down from $1.31 before the Q3 report. The 2014 consensus is currently $0.95, down from $1.50 over the same period. You can see the negative earnings momentum in the company's 'Price & Consensus' chart:ValuationShares of Titan Machinery have rebounded from the initial selloff following its Q3 results. The stock is currently trading at more than 18x the FY2015 Zacks Consensus Estimate. That doesn't look like a screaming value to me, especially considering the negative earnings momentum here.The Bottom LineWith falling estimates and strong headwinds, investors should consider avoiding Titan Machinery until its earnings momentum turns around.Todd Bunton, CFA is the Growth & Income Stock Strategist for Zacks Investment Research and Editor of the Income Plus Investor service.

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