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Reasons to Keep Terex (TEX) Stock in Your Portfolio Now
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Terex Corporation (TEX - Free Report) is well-poised for growth on the back of robust customer demand and backlog levels in both its segments. Focus on cost-control actions, strategic growth initiatives, investment in innovative products and digital innovation will drive growth.
TEX currently has a Zacks Rank #3 (Hold) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
Let's delve deeper into the factors that make Terex worth holding on to at the moment.
Impressive Price Performance
The stock has gained 6.5% in the past three months against the industry’s decline of 8.2%.
Image Source: Zacks Investment Research
Positive Earnings Surprise Trend
Terex has a trailing four-quarter earnings surprise of 31.7%, on average.
Bullish Outlook
Terex expects sales between $4.1 billion and $4.3 billion for 2022, suggesting an 8% year-over-year growth at the midpoint. Earnings are projected in the range of $3.80-$4.20, indicating 30% growth at the midpoint from the year-ago reported figure. Growth will be driven by strong demand, TEX’s efforts to overcome supply disruptions and a ramp-up in production. Price hikes and cost reductions will help offset inflationary pressures and aid earnings.
Upbeat Growth Projections
The Zacks Consensus Estimate for 2022 earnings per share is currently pegged at $4.01, indicating a 30.6% improvement from the prior-year reported figure. The same for 2023 stands at $4.67, projecting an improvement of 16.5% from the year-earlier reported number. TEX has an estimated long-term earnings growth rate of 17.3%.
Other Key Levers
Terex’s Aerial Work Platforms segment is poised to gain from its efforts to right-size its cost structure, focus on operational execution, a strengthening global footprint and an innovative product menu. The segment is witnessing continued solid global demand driven by fleet replacement and growth. The segment’s sales in 2022 are expected in the band of $2.3-$2.4 billion. The midpoint of the range indicates growth of 8% from the prior-year reading. Operating margin is expected at 8-8.5% compared with 7.0% in 2021.
In the Material Processing segment, robust end-market demand across minerals processing, material handling and lifting, environmental and concrete will drive revenues. A solid product pipeline, expansion into newer geographies, rollout of innovative products and a continued strong execution are positives. The segment is anticipated to report net sales between $1.8 billion and $1.9 billion in 2022, indicating growth of 9% at the midpoint from the year-ago reported figure. Operating margin is projected at 14.8-15.3% compared with 14.2% in 2021.
Terex’s backlog in both its segments improved over the last seven quarters owing to solid -market demand. TEX ended the recently reported second-quarter 2022, with a solid total backlog of $3.47 billion. Backlog was up 51% from last year’s levels. This bodes well for its top-line performance in the forthcoming quarters. Higher spending on infrastructure in the United States is expected to be a major catalyst for TEX going forward.
Terex made significant progress in its “Execute, Innovate, Grow” strategy. Per the “Execute” theme, TEX continues the advancement made with its “Execute to Win” theme by intensifying process discipline and implementing several new operational processes, among other initiatives. Working on this theme, TEX managed to lower its SG&A expense to 11% of its sales.
The “Innovate” factor emphasizes on continuously developing its product offerings and applying technology. In sync with this objective, Terex recently launched the first-of-its-kind all-electric utility truck. The “Grow” aspect focuses on increasing its inorganic investment and acquisitions, the most recent being the transactions of Steelweld and ProAll.
Additionally, Terex is focused on maintaining strong liquidity. At the end of the second quarter of 2022, TEX had $678.3 million of total available liquidity, with no near-term maturities. Its total debt-to-total capital ratio has gone down over the past few years and came in at 0.44 as of Jun 30, 2022, lower than the industry’s 0.70.
Stocks to Consider
Some better-ranked stocks in the Industrial Products sector are Applied Industrial Technologies, Inc. (AIT - Free Report) , Sonoco Products (SON - Free Report) and Valmont Industries, Inc. (VMI - Free Report) .
Applied Industrial presently sports a Zacks Rank #1 . AIT delivered a trailing four-quarter earnings surprise of 22.8%, on average.
AIT’s earnings estimates have increased 5.8% for fiscal 2023 (ending June 2023) in the past 60 days. The estimate indicates growth of 10.9% from the last fiscal year’s reading. Its shares have gained 12% in the past three months.
Sonoco presently has a Zacks Rank of 1. SON delivered a trailing four-quarter earnings surprise of 4.06%, on average.
The earnings estimate for SON for fiscal 2022 has increased 15% in the past 60 days. The estimate projects growth of 78.3% from the last fiscal year’s reported number. Its shares have risen 14% in the last three months.
Valmont Industries presently has a Zacks Rank of 2. VMI’s earnings surprise in the last four quarters was 13.7%, on average.
In the past 60 days, Valmont’s earnings estimates for 2022 have increased 3.8%. The estimate projects growth of 27% from the prior-year actuals. VMI has appreciated 12% in the past three months.
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Reasons to Keep Terex (TEX) Stock in Your Portfolio Now
Terex Corporation (TEX - Free Report) is well-poised for growth on the back of robust customer demand and backlog levels in both its segments. Focus on cost-control actions, strategic growth initiatives, investment in innovative products and digital innovation will drive growth.
TEX currently has a Zacks Rank #3 (Hold) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
Let's delve deeper into the factors that make Terex worth holding on to at the moment.
Impressive Price Performance
The stock has gained 6.5% in the past three months against the industry’s decline of 8.2%.
Image Source: Zacks Investment Research
Positive Earnings Surprise Trend
Terex has a trailing four-quarter earnings surprise of 31.7%, on average.
Bullish Outlook
Terex expects sales between $4.1 billion and $4.3 billion for 2022, suggesting an 8% year-over-year growth at the midpoint. Earnings are projected in the range of $3.80-$4.20, indicating 30% growth at the midpoint from the year-ago reported figure. Growth will be driven by strong demand, TEX’s efforts to overcome supply disruptions and a ramp-up in production. Price hikes and cost reductions will help offset inflationary pressures and aid earnings.
Upbeat Growth Projections
The Zacks Consensus Estimate for 2022 earnings per share is currently pegged at $4.01, indicating a 30.6% improvement from the prior-year reported figure. The same for 2023 stands at $4.67, projecting an improvement of 16.5% from the year-earlier reported number. TEX has an estimated long-term earnings growth rate of 17.3%.
Other Key Levers
Terex’s Aerial Work Platforms segment is poised to gain from its efforts to right-size its cost structure, focus on operational execution, a strengthening global footprint and an innovative product menu. The segment is witnessing continued solid global demand driven by fleet replacement and growth. The segment’s sales in 2022 are expected in the band of $2.3-$2.4 billion. The midpoint of the range indicates growth of 8% from the prior-year reading. Operating margin is expected at 8-8.5% compared with 7.0% in 2021.
In the Material Processing segment, robust end-market demand across minerals processing, material handling and lifting, environmental and concrete will drive revenues. A solid product pipeline, expansion into newer geographies, rollout of innovative products and a continued strong execution are positives. The segment is anticipated to report net sales between $1.8 billion and $1.9 billion in 2022, indicating growth of 9% at the midpoint from the year-ago reported figure. Operating margin is projected at 14.8-15.3% compared with 14.2% in 2021.
Terex’s backlog in both its segments improved over the last seven quarters owing to solid -market demand. TEX ended the recently reported second-quarter 2022, with a solid total backlog of $3.47 billion. Backlog was up 51% from last year’s levels. This bodes well for its top-line performance in the forthcoming quarters. Higher spending on infrastructure in the United States is expected to be a major catalyst for TEX going forward.
Terex made significant progress in its “Execute, Innovate, Grow” strategy. Per the “Execute” theme, TEX continues the advancement made with its “Execute to Win” theme by intensifying process discipline and implementing several new operational processes, among other initiatives. Working on this theme, TEX managed to lower its SG&A expense to 11% of its sales.
The “Innovate” factor emphasizes on continuously developing its product offerings and applying technology. In sync with this objective, Terex recently launched the first-of-its-kind all-electric utility truck. The “Grow” aspect focuses on increasing its inorganic investment and acquisitions, the most recent being the transactions of Steelweld and ProAll.
Additionally, Terex is focused on maintaining strong liquidity. At the end of the second quarter of 2022, TEX had $678.3 million of total available liquidity, with no near-term maturities. Its total debt-to-total capital ratio has gone down over the past few years and came in at 0.44 as of Jun 30, 2022, lower than the industry’s 0.70.
Stocks to Consider
Some better-ranked stocks in the Industrial Products sector are Applied Industrial Technologies, Inc. (AIT - Free Report) , Sonoco Products (SON - Free Report) and Valmont Industries, Inc. (VMI - Free Report) .
Applied Industrial presently sports a Zacks Rank #1 . AIT delivered a trailing four-quarter earnings surprise of 22.8%, on average.
AIT’s earnings estimates have increased 5.8% for fiscal 2023 (ending June 2023) in the past 60 days. The estimate indicates growth of 10.9% from the last fiscal year’s reading. Its shares have gained 12% in the past three months.
Sonoco presently has a Zacks Rank of 1. SON delivered a trailing four-quarter earnings surprise of 4.06%, on average.
The earnings estimate for SON for fiscal 2022 has increased 15% in the past 60 days. The estimate projects growth of 78.3% from the last fiscal year’s reported number. Its shares have risen 14% in the last three months.
Valmont Industries presently has a Zacks Rank of 2. VMI’s earnings surprise in the last four quarters was 13.7%, on average.
In the past 60 days, Valmont’s earnings estimates for 2022 have increased 3.8%. The estimate projects growth of 27% from the prior-year actuals. VMI has appreciated 12% in the past three months.