Terex Corporation TEX looks promising at the moment on favorable global markets, backlog strength and momentum in its segments. We are positive on the company’s prospects and believe this is the right time to add the stock to your portfolio, as it is poised to carry the bullish momentum ahead.
Terex currently carries a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors. It has an estimated long-term earnings growth rate of 8.8%.
Let’s delve deeper and analyze the factors that make Terex an attractive investment option.
What’s Working in Favor of Terex?
Solid Q1: Terex reported first-quarter 2019 adjusted earnings per share (EPS) of 87 cents, beating the Zacks Consensus Estimate of 57 cents by a margin of 53%. Additionally, earnings improved 2% year over year. Revenues also climbed 2% year over year to $1.14 billion in the quarter, surpassing the Zacks Consensus Estimate of $1.12 billion. Backlog grew year over year across every segment in the quarter.
Further, backlog was up 11% year over year in the Material Processing (MP) segment, reflecting strong market momentum. Consequently, improving backlog, along with an impressive global market environment, positions the company well for 2019.
Upbeat Guidance: Terex expects to achieve EPS in the upper half of its previous projection of $3.60-$4.20 in 2019, implying a surge of 40% from the prior-year reported number, aided by higher backlog, impressive global markets growth, focus on Execute to Win strategy and capital allocation. The company projects net sales of around $4.7 billion for the year.
Ahead of the Industry: Terex has outperformed the industry with respect to price performance, year to date. Shares of the company have gained around 2.4%, as against the industry’s loss of 3.5%.
Impressive Surprise History: Terex outpaced the Zacks Consensus Estimate in three of the trailing four quarters. The company has an average positive earnings surprise of 15.77%.
Estimates Moving Up: Annual estimates for Terex have moved up in the past 60 days, reflecting analysts’ confidence in the stock, following upbeat first-quarter results. During this period, the Zacks Consensus Estimate for 2019 moved up nearly 6.6% to $4.03. The Zacks Consensus Estimate for 2020 also moved 3.6% north to $4.06.
Healthy Growth Projections: For 2019, the Zacks Consensus Estimate is currently pegged at $4.03, reflecting year-over-year growth of 48.7%. The same for second-quarter is pegged at $1.34, calling for a year-over-year jump of 36.7%.
Growth Drivers: The company is well poised to benefit from the continued implementation of Execute to Win initiatives this year. Terex’s Execute to Win strategy is focused on improving capabilities by investing in people, processes and tools in three priority areas, comprising commercial excellence, lifecycle solutions and strategic sourcing.
Terex’s Aerial Work Platforms segment will gain from stellar global markets, operational execution and innovation. The segment is well positioned for the second quarter with $1.1 billion of backlog. It continues to boost sales in the Asia Pacific region, fueled by increasing product adoption.
Macroeconomic fundamentals and customers’ feedback hint at a multi-year growth period for this segment. With favorable markets and a significantly higher backlog than last year, the MP) segment is well poised for growth in the current year.
Further, rising global demand for crushing and screening equipment, spurred by economic growth, construction activity and aggregate consumption, bodes well. Demand for Fuchs, material handlers and broad line of environmental products continues to rise in global markets, and is anticipated to fuel the segment’s growth.
Terex Corporation Price and Consensus
Terex Corporation price-consensus-chart | Terex Corporation Quote
Other Stocks to Consider
Some other top-ranked stocks in the Industrial Products sector are DMC Global Inc. BOOM, Lawson Products, Inc. LAWS and Harsco Corporation HSC, each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
DMC Global has an estimated earnings growth rate of 83.5% for the ongoing year. The company’s shares have surged 49.3%, in the past year.
Lawson Products has an expected earnings growth rate of 24.5% for the current year. The stock has appreciated 57.4% in a year’s time.
Harsco has a projected earnings growth rate of 9.1% for 2019. The company’s shares have gained 5.4%, over the past year.
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