A look at annual numbers for 3 prior years: (Notes from April 10,2013)
- CNH added revenue by selling Equipment to Titan. Titan bought the inventory on debt (floorplan debt to CNH) only to store the inventory on TITN's property. Titan is stuck with inventory and interest payments (to CNH) on inventory that is just sitting there.
- Why did titan stock up on inventory when its not selling what it already had? Was it because CNH needed to create sales? $1 billion in inventory is a lot of equipment to have laying around. Competing with manufacturers Deere, AGCO, CAT and CNH is going to make it hard to get rid of this equipment.
- lowering their eps estimates from $2.25 to $0.55-$0.75 for the year has still not been reflected in TITN's current stock price. At $16 shares are trading near a PE 30 (while earnings will decline well over 50% year over year