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Terex (TEX) Taps Growth With Product & Backlog Strength

Zacks Equity Research

On Nov 14, we issued an updated research report on Terex Corporation TEX. The company is anticipated to benefit from its focus on strategic priorities and product development. Disciplined capital-allocation strategy and strong backlog also bode well for the company.

After posting an impressive performance in third-quarter 2017, Terex raised its full-year 2017 adjusted EPS guidance range to $1.20-$1.30. The company also updated the full-year sales outlook from down approximately 6% to down about 4%. The guidance reflects upbeat market dynamics and improved operational expectations for fourth-quarter 2017.

Notably, Terex made excellent progress on strategic priorities in the third quarter. During the quarter, the company completed the sale of its crane facility in Jinan, China. In Germany, it sold the manufacturing site in Bierbach. Terex also remains focused on implementing its Execute to Win business system.

Further, Terex will continue to execute its disciplined capital-allocation strategy and return capital to shareholders. In September, the company monetized the remaining holdings of Konecranes shares for $221 million, bringing the total consideration for the disposition of MHPS to about $1.6 billion. These amounts demonstrate significant value to Terex shareholders. The company completed the repricing of term loan in August, which will reduce interest costs. In addition, Terex repurchased around 22.3 million shares for about $770 million in the first nine months of 2017.

For the third quarter in a row, Terex’s backlog grew year over year in every segment. Backlog is expected to improve further backed by continued focus on product development. Last month, Terex launched several key products. It introduced four Genie Xtra Capacity stick booms. It also unveiled the first Xtra Capacity articulated boom — the Genie Z-45 XC.

Moreover, this Zacks Rank #1 (Strong Buy) company has witnessed upward estimates revision over the past month. The Zacks Consensus Estimate for 2017 and 2018 moved up roughly 11% to $1.29 and 9.8% to $2.24, respectively.

Terex has also outperformed its industry with respect to price performance in a year’s time. The stock has gained around 50.4%, while the industry has recorded growth of 44.7% during the same time frame.

Other Stocks that Warrant a Look

Other similarly-ranked stocks in the same space include Caterpillar Inc. CAT, H&E Equipment Services, Inc. HEES and Komatsu Ltd. KMTUY. You can see the complete list of today’s Zacks #1 Rank stocks here.

Caterpillar has an expected long-term earnings growth rate of 10.3%. Its shares are up 48.3% year to date.

H&E Equipment Services has an expected long-term earnings growth rate of 15.6%. Its shares are up 43.3% year to date.

Komatsu has an expected long-term earnings growth rate of 16.2%. Its shares are up 44.6% year to date.

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