Finance and Investment Club at UC Davis

1
Finance and Investment Club at UC Davis
TITAN MACHINERY

• 20/20 Foresight
• Chad Eatinger
• Malek Helo
• David Liu
• Kevin Yip

2
Company Profile

• Operates in the Services sector and the Specialty
  Retail (other) industry.

• American company founded in 1980 and located in
  North Dakota

Company Profile Industry Analysis Key
Statistics Technical Analysis SWOT
Analysis Recommendation
Sell and rent construction and agricultural
equipment
Titan Machinery
Sell parts
Service equipment at retail stores
3
Company Overview (cont.)

• Supplied primarily by CNH Global. CNH
  manufactures Titans construction and
  agricultural equipment.
• Titan offers many auxiliary services

Company Profile Industry Analysis Key
Statistics Technical Analysis SWOT
Analysis Recommendation

• Around-the-clock servicing
• Customer training programs
• Notifying customers of periodic service
  requirements

• Renting
• Equipment transportation
• GPS signal subscriptions
• Financing/insurance
• On-site repairs

4
Industry Analysis
Industry Agriculture Equipment Retailer
Company Profile Industry Analysis Key
Statistics Technical Analysis SWOT
Analysis Recommendation
Company Market Cap
TITN 334.4M
AG 5.2B
BUCY 5.0B
CAT 51.8B
DE 35.2B
KMTUY 32.3B
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Industry Analysis

• SP 500 6 Mo

Company Profile Industry Analysis Key
Statistics Technical Analysis SWOT
Analysis Recommendation

• Dow Jones 6 Mo

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Industry Analysis

• This industry, due to increase in demand for
  agricultural products worldwide, has been doing
  very well lately.
• Strong Growth potential, as India and China
  continue to increase their demand for food.
• As food prices continue to soar, agricultural
  producers are more willing to invest in more
  machinery to match the increase in demand with a
  higher supply.
• Typically, a high debt to equity ratio.

Company Profile Industry Analysis Key
Statistics Technical Analysis SWOT
Analysis Recommendation
7
Key Statistics
Deere Caterpillar
35.23B 51.81B
52,000 102,623
17.50 17.80
24.86B 46.74B
28.22 24.59
3.60B 6.93B
11.43 10.86
1.95B 3.65B
4.327 5.588
18.67 15.08
1.38 1.14
1.47 1.10
Company Profile Industry Analysis Key
Statistics Technical Analysis SWOT
Analysis Recommendation
Titan
Market Cap 334.46M
Employees 716
Qtrly Rev Growth 60.90
Revenue 432.97M
Gross Margin 17.39
EBITDA 21.38M
Oper Margins 4.36
Net Income 5.07M
EPS 0.666
P/E 37.36
PEG 1.09
P/S .73
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The Earnings Game
Company Profile Industry Analysis Key
Statistics Technical Analysis SWOT
Analysis Recommendation

• Fiscal 2008 Fourth Quarter Results
• Equipment sales up 66
• Part sales up 56
• Servicing revenue up 17

• Revenue up 61
• Gross Profit up 76

Unfortunately, Titan announced it would sell 3.5
million of its shares that very same day
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Technical Analysis
Strong RSI
Company Profile Industry Analysis Key
Statistics Technical Analysis SWOT
Analysis Recommendation
W formation showing double bottom
Healthy MACD
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SWOT Analysis - Strengths

• Titans financials
• Titans Price Earnings Ratio compared to industry
  and main competitor
• 37.36 Titan
• 18.69 Deere and Co.
• Industry is at 18.06
• -Fast Growing
• -60.90 per quarter 17.50 Deere and Co.
• -5.10 industry
• Ag is HOT!!
• Farmers will always need new Equipment- They are
  developing new TECH all day. Not only do they
  sell to Large farmers, but they supply to small
  households.

Company Profile Industry Analysis Key
Statistics Technical Analysis SWOT
Analysis Recommendation
11
SWOT Analysis - Weaknesses
Company Profile Industry Analysis Key
Statistics Technical Analysis SWOT
Analysis Recommendation

• Low market capacity - 334.46M compared to Deere-
  Main competitor at 35.27 billion
• 5.07M net income 1.95B net income
• Low inventory turnover compared to industry
• Small presence in the international market
• Only in the USA.
• Small market share.

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SWOT Analysis - Opportunities
Company Profile Industry Analysis Key
Statistics Technical Analysis SWOT
Analysis Recommendation
-Expansion on the horizon -In May 2008, the
Company acquired Quad County Implement, Inc., a
farm equipment dealership of CaseIH and brands in
Blairstown, Iowa. -They have the makings to
expand their market. -Agriculture is hot right
now. -Growth in the International market
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SWOT Analysis - Threats

• Debt comes back to haunt them in the long run
• Low penetration into the international market.
• Titan has a small market share, they cant
  overcome the dominance of Deere Co. Deere will
  always be over their shoulder like a hawk.

Company Profile Industry Analysis Key
Statistics Technical Analysis SWOT
Analysis Recommendation
14
Recommendation
We rate TITN a Moderate Buy at its current
levels. With quarterly revenue growth over 60,
TITN is undertaking tremendous growth. The
demand for agriculture equipment is at an all
time high, and TITN is well positioned within its
US market to take advantage of such strong
demand. However, TITN remains susceptible to
market fluctuations which is evident in the
stocks movements over the past month.
Company Profile Industry Analysis Key
Statistics Technical Analysis SWOT
Analysis Recommendation