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Terex Corporation (TEX - Free Report) , a Zacks Rank #1 (Strong Buy), has come roaring back to life following a weak start to the year. TEX recently entered positive territory in 2022, all while most stocks continue to hover in a deep correction. A slight retreat in price over the past few weeks presents investors with a solid buying opportunity. The company’s longevity and continued stock price ascent speak to management’s ability to adapt to the ever-changing market landscape.
TEX sports the second-highest Zacks Growth Style Score of ‘B’, indicating a strong possibility that the stock propels higher on favorable growth metrics. The company is part of the Zacks Manufacturing – Construction and Mining industry group, which ranks in the top 2% out of more than 250 Zacks Ranked Industries. The industry has widely outperformed the market this year with a nearly 14% return year-to-date.
Because this group is ranked in the top half of all industries, we expect it to continue to outperform the market over the next 3 to 6 months. Also note the favorable metrics for this industry group below:
Image Source: Zacks Investment Research
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Company Description
Terex manufactures and sells aerial work platforms and materials processing machinery worldwide. Its products include portable material lifts, utility equipment, telehandlers, cranes, concrete mixer trucks and pavement, and conveyors. Used in the construction, infrastructure, mining and recycling industries, its products are sold under recognized brands such as Terex, Fuchs, EvoQuip, Powerscreen and Cedarapids.
Terex’s backlog has shown year-over-year growth for eight consecutive quarters and reached $3.9 billion at the end of Q3 this year. This puts TEX in a great position for improved results in the near future. Solid demand and cost savings will help negate the impact of dwindling supply chain disruptions.
Earnings Trends and Future Estimates
TEX has built up an impressive earnings history, surpassing earnings estimates in each of the past four quarters. Back in October, the company reported Q3 EPS of $1.20/share, a 14.29% surprise over the $1.05 consensus estimate. TEX has delivered a +36.65% average earnings surprise over the last four quarters.
The TEX growth engine is expected to remain hot this year, as analysts covering the company have increased their 2023 EPS estimates by +4.79% in the past 60 days. The Zacks Consensus EPS Estimate now stands at $4.81/share, reflecting potential growth of 16.81% relative to last year. Sales are anticipated to climb 5.4% to $4.52 billion.
Image Source: Zacks Investment Research
Let’s Get Technical
TEX shares recently broke into positive ground on the year. Only stocks that are in extremely powerful uptrends are able to make this type of price move while the market hovers in a deep correction. This is the kind of stock we want to include in our portfolio – one that is starting to trend well and receiving positive earnings estimate revisions.
Image Source: StockCharts
Notice how both the 50 and 200-day moving averages (blue and red lines, respectively) are sloping up. It appears the 50-day average is now acting as support, and the recent pullback represents a solid buying opportunity. With both strong fundamentals and technicals, TEX is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Terex has recently witnessed positive revisions. As long as this trend remains intact (and TEX continues to deliver earnings beats), the stock will likely continue its bullish run this year.
Despite the impressive price run off the lows, TEX currently remains relatively undervalued:
Image Source: Zacks Investment Research
Bottom Line
Solid institutional buying should continue to provide a tailwind for the stock price. TEX is ranked favorably by our Zacks Style Score Categories with an overall ‘B’ VGM score. It’s not too difficult to see why this company is a compelling investment.
Backed by a leading industry group and robust history of earnings beats, this market winner is poised to continue its recent run. Robust fundamentals combined with a strong technical trend certainly justify adding shares to the mix. Investors would be wise to consider TEX as a portfolio candidate if they haven’t already done so.
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Bull of the Day: Terex Corp. (TEX)
Terex Corporation (TEX - Free Report) , a Zacks Rank #1 (Strong Buy), has come roaring back to life following a weak start to the year. TEX recently entered positive territory in 2022, all while most stocks continue to hover in a deep correction. A slight retreat in price over the past few weeks presents investors with a solid buying opportunity. The company’s longevity and continued stock price ascent speak to management’s ability to adapt to the ever-changing market landscape.
TEX sports the second-highest Zacks Growth Style Score of ‘B’, indicating a strong possibility that the stock propels higher on favorable growth metrics. The company is part of the Zacks Manufacturing – Construction and Mining industry group, which ranks in the top 2% out of more than 250 Zacks Ranked Industries. The industry has widely outperformed the market this year with a nearly 14% return year-to-date.
Because this group is ranked in the top half of all industries, we expect it to continue to outperform the market over the next 3 to 6 months. Also note the favorable metrics for this industry group below:
Image Source: Zacks Investment Research
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Company Description
Terex manufactures and sells aerial work platforms and materials processing machinery worldwide. Its products include portable material lifts, utility equipment, telehandlers, cranes, concrete mixer trucks and pavement, and conveyors. Used in the construction, infrastructure, mining and recycling industries, its products are sold under recognized brands such as Terex, Fuchs, EvoQuip, Powerscreen and Cedarapids.
Terex’s backlog has shown year-over-year growth for eight consecutive quarters and reached $3.9 billion at the end of Q3 this year. This puts TEX in a great position for improved results in the near future. Solid demand and cost savings will help negate the impact of dwindling supply chain disruptions.
Earnings Trends and Future Estimates
TEX has built up an impressive earnings history, surpassing earnings estimates in each of the past four quarters. Back in October, the company reported Q3 EPS of $1.20/share, a 14.29% surprise over the $1.05 consensus estimate. TEX has delivered a +36.65% average earnings surprise over the last four quarters.
The TEX growth engine is expected to remain hot this year, as analysts covering the company have increased their 2023 EPS estimates by +4.79% in the past 60 days. The Zacks Consensus EPS Estimate now stands at $4.81/share, reflecting potential growth of 16.81% relative to last year. Sales are anticipated to climb 5.4% to $4.52 billion.
Image Source: Zacks Investment Research
Let’s Get Technical
TEX shares recently broke into positive ground on the year. Only stocks that are in extremely powerful uptrends are able to make this type of price move while the market hovers in a deep correction. This is the kind of stock we want to include in our portfolio – one that is starting to trend well and receiving positive earnings estimate revisions.
Image Source: StockCharts
Notice how both the 50 and 200-day moving averages (blue and red lines, respectively) are sloping up. It appears the 50-day average is now acting as support, and the recent pullback represents a solid buying opportunity. With both strong fundamentals and technicals, TEX is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Terex has recently witnessed positive revisions. As long as this trend remains intact (and TEX continues to deliver earnings beats), the stock will likely continue its bullish run this year.
Despite the impressive price run off the lows, TEX currently remains relatively undervalued:
Image Source: Zacks Investment Research
Bottom Line
Solid institutional buying should continue to provide a tailwind for the stock price. TEX is ranked favorably by our Zacks Style Score Categories with an overall ‘B’ VGM score. It’s not too difficult to see why this company is a compelling investment.
Backed by a leading industry group and robust history of earnings beats, this market winner is poised to continue its recent run. Robust fundamentals combined with a strong technical trend certainly justify adding shares to the mix. Investors would be wise to consider TEX as a portfolio candidate if they haven’t already done so.