Shares in Titan Machinery fell to their lowest in nearly two years after the farm equipment retailer cut its earnings forecasts, warning of a dent to farm spending from lower crop prices and potentially disappointing yields.
The seller of Case and New Holland machinery cut to $2.25bn-2.45bn, from $2.35bn-2.55bn, its forecast for revenues in the year to the January, and to $25.4m-31.8m, from $36.4m-42.8m, its estimate of earnings.
Per share, this represented a cut in earnings to $1.20-1.50, from $1.70-2.00.
The downgrade - which removed any expectation of matching last year's $2.00-a-share result, or market expectations of $1.79 a share – reflected expectations of "challenges" presented by a downturn in farm income.
"As we look toward the back half of the year for our agriculture business, we anticipate a challenging environment given lower commodity prices combined with anticipated reduced crop production in our agriculture footprint," David Meyer, the Titan chairman and chief executive, said.
"We believe these factors will affect our customers' sentiment, resulting in lower equipment revenues and pricing pressure on equipment margins."
Growers throughout the US are expected to see a drop in profits thanks to a pullback in prices from last year's highs – although the level of decline is disputed.
While Deere & Co has forecast a relatively small drop in cash receipts, other commentators, such as Creighton University farm economist Ernie Goss, have cautioned over a shrinking machinery market.
The threat to income is seen as particularly severe in Titan's stronghold in western Corn Belt and northern US states, which have suffered particular dryness.
The group said that its footprint, which includes Iowa, Minnesota and North Dakota, encompassed 2.6m acres on which growers had claimed so-called prevent plant insurance, after being kept from fields by an unusually wet spring.
That is equivalent to more than half the total prevent plant claims in the US.
Crop broker Allendale cautioned on Wednesday, after a farmer survey, that the North Dakota corn yield would fall 17 bushels per acre short of US Department of Agriculture forecasts, and the soybean yield 7 bushels per acre short.
The ag market downturn had already been felt in both the new equipment segment and in used machinery, of which prices were "under pressure".
While Titan's parts and services departments "performed well" in the latest quarter, from May to July, "they were partially offset by lower-than-expected equipment margins", Mr Meyer said.
With Titan's smaller construction equipment division falling to a loss, group earnings for the quarter fell 27% to $3.78m, despite a rise of 19.0% to $488.2m in revenues, swollen by acquisitions, including expansion into the eastern European farm machinery market.
The group had this year "slowed our acquisition pace, and are focused on integrating our recent acquisitions into our distribution network," Mr Meyer added.
Group earnings for the quarter equated to 18 cents per share, also a little below Wall Street forecasts of a 19.5 cents-per-share result.
Titan Machinery shares dropped to $15.89 in early deals in New York, their lowest since October 2011.
The shares had recovered to $16.92 after an hour's trading a decline of 1.2% on the day.