Terex Corporation’s ( TEX Quick Quote TEX - Free Report) strong fundamentals and solid financial position, with robust growth projections, make it a good investment choice. It 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 growth bodes well. TEX currently sports a Zacks Rank #1 (Strong Buy). You can see . the complete list of today’s Zacks #1 Rank stocks here Upbeat Outlook
Terex expects earnings per share between $5.60 and $6.00 in 2023, which indicates 34% growth at the mid-point from the 2022 reported figure. The company expects sales between $4.8 billion and $5.0 billion compared with the $4.4 billion reported in 2022. The improvement will be driven by strong price execution and volume growth.
The operating margin is expected at 11.4-11.8%, suggesting a rise from the margin of the 9.5% reported in 2022. Growth will be driven by strong demand, and the company’s efforts to overcome supply disruptions and increase production. Price hikes and cost reductions will help offset inflationary pressures and aid earnings.
Northward Growth Projections
The Zacks Consensus Estimate for TEX’s 2023 earnings per share has moved up 22% over the past 30 days to $5.96. The figure indicates a 38% improvement from the prior-year reported figure. The same for 2024 stands at $6.06, indicating a year-over-year improvement of 1.8%. The estimate has moved up 17% over the past 30 days. TEX has an estimated long-term earnings growth rate of 17.6%.
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The stock has gained 53.7% in the past year compared with the
industry’s 7.6% growth. Positive Earnings Surprise Trend
Terex has surpassed the Zacks Consensus Estimate in all the trailing four quarters, delivering an earnings surprise of 27.1%.
Solid Momentum in Segments
Terex’s Aerial Work Platforms segment is witnessing continued strong global demand, driven by fleet replacement and growth. It will gain from its efforts to right-size its cost structure, focus on operational execution, strengthening its global footprint and innovative product offerings.
In the Material Processing segment, robust end-market demand will drive revenues. A solid product pipeline, expansion into newer geographies, the rollout of innovative products and continued strong execution are positives.
Terex’s backlog in both its segments has improved over the past few quarters and the company ended the first quarter of 2023 with a solid total backlog of $4.1 billion. 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.
Other Key Drivers
Terex made significant progress in its “Execute, Innovate, Grow” strategy. Per the “Execute” theme, TEX continues with the advancement made with its “Execute to Win” theme by intensifying process discipline and implementing several operational processes, among other initiatives. Working on this theme, TEX managed to lower its SG&A expenses to 10.6% of its sales in the first quarter of 2023 from 15.3% in 2020.
The “Innovate” factor emphasizes continuously developing its product offerings and applying technology. In sync with this objective, Terex introduced Utilities products for the electric grid and launched Genie products, including telehandlers and electric drive scissors. The company invested in digital with Customer Dealer Integration and telematics. Terex launched the first-of-its-kind all-electric utility truck. The “Grow” aspect focuses on increasing its inorganic investment and acquisitions, namely the Steelweld and ProAll transactions.
At the end of Mar 31, 2023, the company had $677 million of total available liquidity and net leverage of 1.0X. It expects to generate a free cash flow of $300-$350 million in 2023, whereas it reported $152 million in 2022. Its total debt-to-total capital ratio has gone down over the past few years and was at 0.38 as of Mar 31, 2023, lower than the industry’s 0.67. The company’s times interest earned ratio was at 9.2.
Other Stocks to Consider
Some other top-ranked stocks from the Industrial Products sector are
Worthington Industries, Inc. ( WOR Quick Quote WOR - Free Report) , AptarGroup, Inc. ( ATR Quick Quote ATR - Free Report) and Alamo Group ( ALG Quick Quote ALG - Free Report) , all of which also sport a Zacks Rank of 1 at present. Worthington Industries has an average trailing four-quarter earnings surprise of 27.5%. The Zacks Consensus Estimate for WOR’s fiscal 2023 earnings is pegged at $4.93 per share. The consensus estimate for 2023 earnings has moved north by 17.7% in the past 60 days. Its shares gained 28.5% in the last year.
AptarGroup has an average trailing four-quarter earnings surprise of 6.4%. The Zacks Consensus Estimate for ATR’s 2023 earnings is pegged at $4.04 per share. The consensus estimate for 2023 earnings has moved up 5% in the past 60 days. ATR’s shares have gained 14% in the past year.
The Zacks Consensus Estimate for Alamo Group’s 2023 earnings per share is pegged at $11.03. The consensus estimate for 2023 earnings rose 13% in the last 30 days. ALG has a trailing four-quarter average earnings surprise of 17.7%. Its shares soared 58% in the last year.