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Here's Why You Should Hold Terex (TEX) in Your Portfolio Now
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Terex Corporation (TEX - Free Report) has been gaining from strong demand and improved volumes. The company’s disciplined capital allocation strategy and backlog strength will also fuel growth.
Although TEX has been witnessing supply-chain challenges and higher costs, these are expected to be offset by its pricing and cost-saving actions.
Let’s delve deeper and analyze the factors that make this Zacks Rank #3 (Hold) stock worth holding on to at present.
Solid Q1 Results: Terex reported first-quarter 2023 adjusted earnings per share of $1.60, which beat the Zacks Consensus Estimate of $1.05. The bottom line surged 116% from the prior-year quarter, courtesy of strong demand and a healthy backlog.
Revenues in the reported quarter increased 23.2% year over year to $1,236 million. The top line surpassed the Zacks Consensus Estimate of $1,134 million.
Positive Earnings Surprise History: TEX has an average trailing four-quarter earnings surprise of 27.1%.
Optimistic Growth Projections: The Zacks Consensus Estimate for the company’s 2023 earnings has moved 20.8% upward over the past 60 days and is pegged at $5.92 per share. It suggests growth of 37% from the year-ago reported figure.
Upbeat FY23 Outlook: Backed by a strong performance in the first quarter, Terex raised its 2023 outlook. The company expects earnings per share between $5.60 and $6.00, indicating 34% growth at the mid-point from adjusted earnings per share of $4.32 reported in 2022.
The company expects sales between $4.8 billion and $5 billion. The mid-point of the range suggests growth of 11% from that reported in 2022.
Price Performance: Terex's shares have gained 114% over the past year compared with the industry’s growth of 44.6%.
Image Source: Zacks Investment Research
Solid Growth Levels: The company has been delivering year-over-year growth in earnings over the past nine quarters, driven by robust bookings and revenue growth, and margin expansion in both business segments.
Its backlog has also shown year-over-year improvements over the past nine quarters and reached a solid $4.1 billion at the end of first-quarter 2023. Both segments witnessed improvements in backlog over the said time frame.
Robust backlog and strong end-market demand are expected to support its top-line performance. Increased spending from Infrastructure Bill is expected to be a major catalyst for Terex, going forward.
Strategic Initiatives: The company continues to progress well on its “Execute, Innovate, Grow” strategy. In sync with this, it has been investing in innovative products, digital innovation, the expansion of manufacturing facilities and acquisitions. This will drive its performance in the forthcoming quarters.
TEX’s efforts to overcome supply disruptions and increase production will also boost results in the upcoming quarters. Price hikes and cost reductions will help offset inflationary pressures and aid earnings.
Solid Balance Sheet: Terex is focused on maintaining strong liquidity and cash position. 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.
Terex’s board of directors recently approved a 15% hike in its dividend. The company has implemented several cost-reduction actions to preserve cash. TEX has been executing company-wide SG&A cost-reduction initiatives.
Near-Term Concerns
The company’s operations may be adversely affected by ongoing material shortages and production delays.
Although end-market demand remains strong, supply-chain, labor, freight and logistic challenges have been impacting production, consequently impairing Terex’s ability to meet these levels.
Moreover, increased input costs, primarily of steel, have impacted the company’s margins.
Worthington Industries has an average trailing four-quarter earnings surprise of 14.9%. The Zacks Consensus Estimate for WOR’s fiscal 2023 earnings is pegged at $4.94 per share. The consensus estimate for 2023 earnings has moved north by 10.5% in the past 60 days. Its shares gained 54.3% in the last year.
Manitowoc has an average trailing four-quarter earnings surprise of 38.8%. The Zacks Consensus Estimate for MTW’s 2023 earnings is pegged at 85 cents per share. The consensus estimate for 2023 earnings has moved 63.5% north in the past 60 days. MTW’s shares gained 77.7% in the last year.
The Zacks Consensus Estimate for Grainger’s 2023 earnings per share is pegged at $35.83, up 7.6% in the past 60 days. It has a trailing four-quarter average earnings surprise of 9.1%. GWW gained 71.2% in the last year.
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Here's Why You Should Hold Terex (TEX) in Your Portfolio Now
Terex Corporation (TEX - Free Report) has been gaining from strong demand and improved volumes. The company’s disciplined capital allocation strategy and backlog strength will also fuel growth.
Although TEX has been witnessing supply-chain challenges and higher costs, these are expected to be offset by its pricing and cost-saving actions.
Let’s delve deeper and analyze the factors that make this Zacks Rank #3 (Hold) stock worth holding on to at present.
Solid Q1 Results: Terex reported first-quarter 2023 adjusted earnings per share of $1.60, which beat the Zacks Consensus Estimate of $1.05. The bottom line surged 116% from the prior-year quarter, courtesy of strong demand and a healthy backlog.
Revenues in the reported quarter increased 23.2% year over year to $1,236 million. The top line surpassed the Zacks Consensus Estimate of $1,134 million.
Positive Earnings Surprise History: TEX has an average trailing four-quarter earnings surprise of 27.1%.
Optimistic Growth Projections: The Zacks Consensus Estimate for the company’s 2023 earnings has moved 20.8% upward over the past 60 days and is pegged at $5.92 per share. It suggests growth of 37% from the year-ago reported figure.
Upbeat FY23 Outlook: Backed by a strong performance in the first quarter, Terex raised its 2023 outlook. The company expects earnings per share between $5.60 and $6.00, indicating 34% growth at the mid-point from adjusted earnings per share of $4.32 reported in 2022.
The company expects sales between $4.8 billion and $5 billion. The mid-point of the range suggests growth of 11% from that reported in 2022.
Price Performance: Terex's shares have gained 114% over the past year compared with the industry’s growth of 44.6%.
Image Source: Zacks Investment Research
Solid Growth Levels: The company has been delivering year-over-year growth in earnings over the past nine quarters, driven by robust bookings and revenue growth, and margin expansion in both business segments.
Its backlog has also shown year-over-year improvements over the past nine quarters and reached a solid $4.1 billion at the end of first-quarter 2023. Both segments witnessed improvements in backlog over the said time frame.
Robust backlog and strong end-market demand are expected to support its top-line performance. Increased spending from Infrastructure Bill is expected to be a major catalyst for Terex, going forward.
Strategic Initiatives: The company continues to progress well on its “Execute, Innovate, Grow” strategy. In sync with this, it has been investing in innovative products, digital innovation, the expansion of manufacturing facilities and acquisitions. This will drive its performance in the forthcoming quarters.
TEX’s efforts to overcome supply disruptions and increase production will also boost results in the upcoming quarters. Price hikes and cost reductions will help offset inflationary pressures and aid earnings.
Solid Balance Sheet: Terex is focused on maintaining strong liquidity and cash position. 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.
Terex’s board of directors recently approved a 15% hike in its dividend. The company has implemented several cost-reduction actions to preserve cash. TEX has been executing company-wide SG&A cost-reduction initiatives.
Near-Term Concerns
The company’s operations may be adversely affected by ongoing material shortages and production delays.
Although end-market demand remains strong, supply-chain, labor, freight and logistic challenges have been impacting production, consequently impairing Terex’s ability to meet these levels.
Moreover, increased input costs, primarily of steel, have impacted the company’s margins.
Stocks to Consider
Some better-ranked stocks from the Industrial Products sector are Worthington Industries, Inc. (WOR - Free Report) , The Manitowoc Company, Inc. (MTW - Free Report) and W.W. Grainger, Inc. (GWW - Free Report) . WOR and MTW flaunt a Zacks Rank #1 (Strong Buy) at present, and GWW has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Worthington Industries has an average trailing four-quarter earnings surprise of 14.9%. The Zacks Consensus Estimate for WOR’s fiscal 2023 earnings is pegged at $4.94 per share. The consensus estimate for 2023 earnings has moved north by 10.5% in the past 60 days. Its shares gained 54.3% in the last year.
Manitowoc has an average trailing four-quarter earnings surprise of 38.8%. The Zacks Consensus Estimate for MTW’s 2023 earnings is pegged at 85 cents per share. The consensus estimate for 2023 earnings has moved 63.5% north in the past 60 days. MTW’s shares gained 77.7% in the last year.
The Zacks Consensus Estimate for Grainger’s 2023 earnings per share is pegged at $35.83, up 7.6% in the past 60 days. It has a trailing four-quarter average earnings surprise of 9.1%. GWW gained 71.2% in the last year.