Titan International (TWI)

Agricultural and farm machinery company Titan (NSYE:TWI) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 4.1% year on year to $466.5 million. On the other hand, next quarter’s revenue guidance of $397.5 million was less impressive, coming in 5.5% below analysts’ estimates. Its GAAP loss of $0.04 per share was $0.01 below analysts’ consensus estimates.

Company Overview

Acquiring Goodyear’s farm tire business in 2005, Titan (NSYE:TWI) is a manufacturer and supplier of wheels, tires, and undercarriages used in off-highway vehicles such as construction vehicles.

Agricultural machinery companies are investing to develop and produce more precise machinery, automated systems, and connected equipment that collects analyzable data to help farmers and other customers improve yields and increase efficiency. On the other hand, agriculture is seasonal and natural disasters or bad weather can impact the entire industry. Additionally, macroeconomic factors such as commodity prices or changes in interest rates–which dictate the willingness of these companies or their customers to invest–can impact demand for agricultural machinery.

Titan’s peers and competitors include Goodyear (NASDAQ:GT) and Myers Industries (NYSE:MYE).

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Titan International grew its sales at a decent 7.9% compounded annual growth rate. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Titan International’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 3.7% over the last two years. Titan International isn’t alone in its struggles as the Agricultural Machinery industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.

This quarter, Titan International reported modest year-on-year revenue growth of 4.1% but beat Wall Street’s estimates by 1.7%. Company management is currently guiding for a 3.6% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 5.9% over the next 12 months. While this projection indicates its newer products and services will fuel better top-line performance, it is still below average for the sector.

Titan International has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 14.4% gross margin over the last five years. That means Titan International paid its suppliers a lot of money ($85.60 for every $100 in revenue) to run its business.

Titan International’s gross profit margin came in at 15.2% this quarter, up 2.4 percentage points year on year. Zooming out, however, Titan International’s full-year margin has been trending down over the past 12 months, decreasing by 1.5 percentage points. If this move continues, it could suggest a more competitive environment with some pressure to lower prices and higher input costs (such as raw materials and manufacturing expenses).

Titan International was profitable over the last five years but held back by its large cost base. Its average operating margin of 5.4% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

Analyzing the trend in its profitability, Titan International’s operating margin decreased by 3.9 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Titan International’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, Titan International generated an operating margin profit margin of 2.1%, up 1.2 percentage points year on year. Since its gross margin expanded more than its operating margin, we can infer that leverage on its cost of sales was the primary driver behind the recently higher efficiency.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Although Titan International’s full-year earnings are still negative, it reduced its losses and improved its EPS by 38.3% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

Sadly for Titan International, its EPS declined by more than its revenue over the last two years, dropping 43.2%. This tells us the company struggled to adjust to shrinking demand.

We can take a deeper look into Titan International’s earnings to better understand the drivers of its performance. We mentioned earlier that Titan International’s operating margin expanded this quarter, but a two-year view shows its margin has declinedwhile its share count has grown 1.3%. This means the company not only became less efficient with its operating expenses but also diluted its shareholders.

In Q3, Titan International reported EPS of negative $0.04, up from negative $0.25 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast Titan International’s full-year EPS of negative $0.10 will flip to positive $0.22.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Titan International has shown poor cash profitability over the last five years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 2.8%, lousy for an industrials business.

Titan International’s free cash flow clocked in at $29.89 million in Q3, equivalent to a 6.4% margin. The company’s cash profitability regressed as it was 2.9 percentage points lower than in the same quarter last year, but it’s still above its five-year average. We wouldn’t read too much into this quarter’s decline because investment needs can be seasonal, leading to short-term swings. Long-term trends are more important.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although Titan International hasn’t been the highest-quality company lately, it historically found a few growth initiatives that worked. Its five-year average ROIC was 13.3%, higher than most industrials businesses.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Titan International’s ROIC has decreased significantly over the last few years. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Titan International reported $205.4 million of cash and $578.3 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $99.9 million of EBITDA over the last 12 months, we view Titan International’s 3.7× net-debt-to-EBITDA ratio as safe. We also see its $14.6 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly Titan International blew past analysts’ EBITDA expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, its revenue and EBITDA guidance for next quarter missed. Overall, this was a mixed quarter. The stock traded up 2.8% to $8.17 immediately following the results.

Updated: December 4, 2025 at 10:09 PM EST

Before making an investment decision, investors should account for Titan International’s business fundamentals and valuation in addition to what happened in the latest quarter.

Titan International doesn’t pass our quality test. Although its revenue growth was decent over the last five years, it’s expected to deteriorate over the next 12 months and its diminishing returns show management's prior bets haven't worked out. And while the company’s spectacular EPS growth over the last five years shows its profits are trickling down to shareholders, the downside is its projected EPS for the next year is lacking.

Titan International’s P/E ratio based on the next 12 months is 69x. This multiple tells us a lot of good news is priced in - we think there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $11 on the company (compared to the current share price of $8.31).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.