Positive earnings growth over the past three years hasn’t been enough to provide favorable returns for Titan Machinery (NASDAQ:TITN) shareholders

This week we saw that Titan Machinery Inc. (NASDAQ:TITN) stock price rises 10%. But in the last three years we have seen a pretty serious decline. Tragically, the share price fell 54% during that time. So it’s nice to see things picking up again. Maybe the company has started a new chapter.

While the last three years have been tough for Titan Machinery shareholders, the past week showed promising signs. So let’s look at the longer-term fundamentals and see if they were the cause of the negative returns.

Check out our latest analysis for Titan Machinery

While the efficient markets hypothesis continues to be advocated by some, it has been proven that markets are over-reactive dynamic systems and investors are not always rational. One imperfect but simple way to assess how the market perception of a company has changed is to compare the change in earnings per share (EPS) with the share price movement.

During the unfortunate three years of share price decline, Titan Machinery actually saw its earnings per share (EPS) increase by 21% per year. Given the reaction of the share price, one might suspect that earnings per share (EPS) is not a good indicator of business performance during the period (perhaps due to a one-off loss or gain). Alternatively, growth expectations may have been unreasonable in the past.

It’s worth taking a look at other metrics, as the EPS growth doesn’t seem to correspond with the falling share price.

We note that revenue has actually grown 21% annually over three years, so that doesn’t seem to be a reason to sell shares. It’s probably worth investigating Titan Machinery further. While we may be missing something in this analysis, there may also be a chance.

The graphic below shows how earnings and revenue have changed over time (discover the exact values ​​by clicking on the image).

We consider it positive that insiders have made significant purchases in the last year. However, most people consider earnings and revenue growth trends to be a more meaningful guide to a company. If you’re thinking about buying or selling Titan Machinery stock, you should check this out free Report with analyst profit forecasts.

A different perspective

Titan Machinery shareholders are down 39% for the year, but the market itself is up 35%. Even the share prices of good stocks fall sometimes, but we want to see improvements in a company’s fundamental metrics before getting too interested. On the bright side, long-term shareholders have made money, with gains of 3% per year over half a decade. If fundamentals continue to point to long-term sustainable growth, the current sell-off could be an opportunity worth considering. While it’s well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For this purpose you should inform yourself about the 3 warning signs We discovered Titan Machinery (including two that make us uncomfortable).

Titan Machinery isn’t the only stock insiders are buying. For those who like to find lesser known companies The free A list of growing companies with recent insider purchases might be just the ticket.

Please note that the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term focused analysis based on fundamental data. Note that our analysis may not reflect the latest price-sensitive company announcements or qualitative material. Simply Wall St has no positions in any stocks mentioned.