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Terex (TEX) Hits 52-Week High: What's Driving the Upside?

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Shares of Terex Corporation (TEX - Free Report) scaled a fresh 52-week high of $31.95 during trading session on Nov 18, before retracting a bit to close at $30.71. Forecast-topping third-quarter 2020 results, benefits from its strategic growth initiatives in the company’s segments and focus on cost-reduction actions have contributed to this rally.

The stock has appreciated 106.7% over the past six months, outperforming the industry’s growth of 49.5%.

Q3 Earnings & Sales Top Estimates

The company reported adjusted earnings per share of 31 cents for the September-end quarter, surpassing the Zacks Consensus Estimate of 4 cents. Revenues of $766 million also beat the consensus mark of $757 million.

Driving Factors

Terex is focused on aligning production across its segments in response to the customer demand environment, while aggressively managing cost and working capital. Its Aerial Work Platforms (AWP) segment will gain from strategic source and savings, right-sizing the cost structure, operational execution and strengthening the company’s global footprint over the long haul. The utilities business will benefit from the new manufacturing facility being built in Watertown, SD, that will increase capacity and significantly boost productivity. In the Material Processing (MP) segment, a solid product pipeline, expansion into newer geographies as well as delivering innovative products position the segment well for growth.

The company has made considerable progress in its Focus, Simplify and Execute to Win strategy. Having fulfilled the Focus and Simplify elements of this strategy, Terex is now making progress toward the process-improvement objectives associated with Execute to Win.

In sync with the Focus element that calls for increased investments on high performing businesses, Terex completed the divesture of the Demag Mobile Cranes business and certain U.S. Crane product lines. The company’s business portfolio now comprises businesses that have the ability to earn more than their cost of capital through business cycles consistently. Also, over the past few years, Terex has transformed into a structurally simpler company committed to becoming more process-driven in order to achieve operational excellence.

Under its Execute to Win strategy, the company is focused on enhance its capabilities by investing in people, processes and tools in three priority areas — Commercial Excellence, Lifecycle Solutions and Strategic Sourcing. Terex is now committed to its next phase of “Execute, Innovate, Grow.” It will focus on boosting cash flow and profitability, and continue to innovate in products and technology.

Terex is focused on maintaining a strong liquidity and cash position, placing it well to navigate through the current unprecedented situation. The company has implemented several cost-reduction actions to preserve cash. Management expects to deliver solid free cash flow in the ongoing quarter based on the current demand scenario and cost-reduction initiatives. Moreover, Terex has reduced its capital expenditure for this year, while continuing to fund growth capital projects. The company continues to invest in innovative products and the expansion of manufacturing facilities to ensure growth in the upcoming period.

Positive Estimate Revisions

The Zacks Consensus Estimate for the company’s ongoing-year earnings has narrowed from a loss of 42 cents per share to a loss of 7 cents over the past 30 days.

Zacks Rank & Other Stocks to Consider

Terex currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the Industrial Products sector are Crown Holdings, Inc. (CCK - Free Report) , iRobot Corporation (IRBT - Free Report) and SiteOne Landscape Supply, Inc. (SITE - Free Report) . While Crown Holdings and iRobot flaunt a Zacks Rank #1 (Strong Buy), SiteOne Landscape carries a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Crown Holdings has a projected earnings growth rate of 11.7% for fiscal 2020. Over the past six months, the company’s shares have appreciated 56.2%.

iRobot has an estimated earnings growth rate of 18.8% for the ongoing year. The company’s shares have gained 19.2% over the past six months.

SiteOne Landscape has an expected earnings growth rate of 28.6% for 2020. The stock has climbed 51.7% in six months’ time.

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Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

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