Will Terex Corp. (TEX) Miss Earnings Estimates this Quarter?
Terex Corp. (TEX), the global equipment manufacturer, is slated to report second-quarter fiscal 2014 results after the market closes on Jul 23. In the last quarter it posted a negative surprise of 17.65%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Terex’s first-quarter 2014 earnings were 28 cents a share, up 27% year over year. For 2014, the company reiterated its earnings per share guidance in the band of $2.50 $2.80. The company also maintained its sales guidance of $7.3—$7.7 billion for the full year. The guidance reflects the benefits of internal cost initiatives, capital structure improvements and some growth in projected net sales, tempered by continued market uncertainty, particularly in developing markets. Even though the company expects the global economy to be stronger in 2014, it will still be modest when compared to historic demand levels.
Moreover, pricing pressure, a slower-than anticipated construction recovery, adverse currency fluctuations, commodity price volatility and competition remain as headwinds.
Earnings Whispers?
Our proven model does not conclusively show that Terex is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below.
Zacks ESP: Terex has an Earnings ESP of -1.25%. This is because the Most Accurate estimate stands at 81 cents per share while the Zacks Consensus Estimate is at 80 cents, resulting in 1.25% ESP.
Zacks Rank #4 (Sell): Terex's Zacks Rank #4 when combined with a -1.25% ESP makes a beat highly unlikely. We caution against stocks with Zacks Rank #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings surprise:
Caterpillar Inc. (CAT) has an earnings ESP of +2.00% and a Zacks Rank #2 (Buy).
Martin Marietta Materials Inc. (MLM) with an Earnings ESP of +2.44% holds a Zacks Rank #2 (Buy).
Kennametal Inc. (KMT) has an Earnings ESP of +1.12% and a Zacks Rank #3 (Hold).
Read the Full Research Report on TEX
Read the Full Research Report on CAT
Read the Full Research Report on MLM
Read the Full Research Report on KMT
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