Zacks Investment Research downgraded Titan International Inc. TWI to a Zacks Rank #5 (Strong Sell) on Dec 24, 2015. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of underperforming the broader market over the next few quarters.
Why the Downgrade?
Market sentiments have been unfavorable for Titan International since the beginning of 2015 as is evident from a negative year-to-date return of 60.4%. The company’s financial performance in the last four quarters was disappointing, with a negative average earnings surprise of 216.25%. Last quarter, the company recorded a loss of 59 cents per share, wider than the Zacks Consensus Estimate of a loss of 10 cents. Titan International currently has a market capitalization of $226 million.
Titan International’s top line plunged 31.3% year over year due to weaknesses in Agricultural, Earthmoving/construction and Consumer business segments. Also, the company’s gross margin decreased 120 basis points to 8.5%. Hence, the lackluster third-quarter results have made investors doubtful about Titan International’s future.
Over the last 60 days, the Zacks Consensus Estimate for the stock has fallen from a loss of 25 cents per share to a loss of 83 cents for 2015, and from a loss of 17 cents to a loss of 36 cents for 2016. Also, the estimate for fourth-quarter 2015 has declined from a loss of 20 cents per share to a loss of 27 cents.
Stocks to Consider
Some better-ranked companies in the same sector are Codexis, Inc. CDXS, Unifi Inc. UFI and John Bean Technologies Corporation JBT. While Codexis sports a Zacks Rank #1 (Strong Buy), both Unifi and John Bean Technologies hold a Zacks Rank #2 (Buy).
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