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Terex (TEX) Up 5% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Terex (TEX - Free Report) . Shares have added about 5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Terex due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Terex Q3 Earnings Beat Estimates, Decline Y/Y
Terex reported third-quarter 2024 adjusted earnings per share of $1.46, which beat the Zacks Consensus Estimate of $1.27. The bottom line fell 17% from the prior-year quarter.
Terex’s Revenues & Profits Dip in Q3
Revenues in the quarter fell 6% year over year to $1.2 billion, which surpassed the Zacks Consensus Estimate of $1.14 billion. The company witnessed lower-than-expected volumes.
The cost of goods sold decreased 3% year over year to $967 million. Gross profit fell 16% to $245 million. Selling, general and administrative expenses were $123 million , down 5% from the prior-year quarter.
Terex reported an operating profit of $122 million, which marked a 25% plunge from the prior-year quarter. The downside was mainly due to decline in sales volume and unfavorable mix. The operating margin was 10.1% compared with the 12.7% in the last-year quarter.
Adjusted operating profit was $127 million, while the adjusted operating margin was 10.5%.
TEX’s Segment Performances
The Material Processing segment’s revenues totaled $444 million, reflecting a year-over-year fall of 18% due to channel adjustments and weak end-market demand in few areas.
The segment reported an operating income of $83 million, down 11% year over year. The downside was attributed to lower sales volume and an unfavorable product and geographical mix.
The Aerial Work Platforms segment generated revenues of $769 million , up 2.4% from the year-ago quarter.
The segment reported an operating profit of $83 million, down 11% year over year due to unfavorable product mix and higher freight costs.
Terex’s Cash Flow & Balance Sheet Updates
Terex had cash and cash equivalents of $352 million as of Sept. 30, 2024, compared with $371 million as of Dec. 31, 2023. The company generated $149 million in cash from operating activities in the first nine months of 2024 compared with $369 million in the prior-year period. It returned $66 million to shareholders through share repurchases and dividends in the January-September period.
TEX Acquires ESG
In October 2024, Terex completed the previously announced acquisition of Environmental Solutions Group (“ESG”). This added a market leader in waste and recycling to its portfolio. It will also enhance Terex’s financial profile, including revenues, free cash flow, EBITDA margin and earnings per share.
Terex Revises 2024 Outlook
Including the contribution from ESG, Terex expects sales to be between $5 billion and $5.2 billion in 2024. The midpoint of the guidance implies a year-over-year decline of 1%. Revenues for the Materials Processing and AWP segments are projected around $1.9 billion and $3 billion, respectively.
EBITDA is expected to be between $635 million and $670 million. Operating margin is expected to be in the band of 11.4- 11.7%.
Terex expects adjusted earnings per share to be between $5.85 and $6.25. The guidance indicates a 14% decline from adjusted earnings of $7.06 per share reported in 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -22.8% due to these changes.
VGM Scores
Currently, Terex has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Terex has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Terex (TEX) Up 5% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Terex (TEX - Free Report) . Shares have added about 5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Terex due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Terex Q3 Earnings Beat Estimates, Decline Y/Y
Terex reported third-quarter 2024 adjusted earnings per share of $1.46, which beat the Zacks Consensus Estimate of $1.27. The bottom line fell 17% from the prior-year quarter.
Terex’s Revenues & Profits Dip in Q3
Revenues in the quarter fell 6% year over year to $1.2 billion, which surpassed the Zacks Consensus Estimate of $1.14 billion. The company witnessed lower-than-expected volumes.
The cost of goods sold decreased 3% year over year to $967 million. Gross profit fell 16% to $245 million. Selling, general and administrative expenses were $123 million , down 5% from the prior-year quarter.
Terex reported an operating profit of $122 million, which marked a 25% plunge from the prior-year quarter. The downside was mainly due to decline in sales volume and unfavorable mix. The operating margin was 10.1% compared with the 12.7% in the last-year quarter.
Adjusted operating profit was $127 million, while the adjusted operating margin was 10.5%.
TEX’s Segment Performances
The Material Processing segment’s revenues totaled $444 million, reflecting a year-over-year fall of 18% due to channel adjustments and weak end-market demand in few areas.
The segment reported an operating income of $83 million, down 11% year over year. The downside was attributed to lower sales volume and an unfavorable product and geographical mix.
The Aerial Work Platforms segment generated revenues of $769 million , up 2.4% from the year-ago quarter.
The segment reported an operating profit of $83 million, down 11% year over year due to unfavorable product mix and higher freight costs.
Terex’s Cash Flow & Balance Sheet Updates
Terex had cash and cash equivalents of $352 million as of Sept. 30, 2024, compared with $371 million as of Dec. 31, 2023. The company generated $149 million in cash from operating activities in the first nine months of 2024 compared with $369 million in the prior-year period. It returned $66 million to shareholders through share repurchases and dividends in the January-September period.
TEX Acquires ESG
In October 2024, Terex completed the previously announced acquisition of Environmental Solutions Group (“ESG”). This added a market leader in waste and recycling to its portfolio. It will also enhance Terex’s financial profile, including revenues, free cash flow, EBITDA margin and earnings per share.
Terex Revises 2024 Outlook
Including the contribution from ESG, Terex expects sales to be between $5 billion and $5.2 billion in 2024. The midpoint of the guidance implies a year-over-year decline of 1%. Revenues for the Materials Processing and AWP segments are projected around $1.9 billion and $3 billion, respectively.
EBITDA is expected to be between $635 million and $670 million. Operating margin is expected to be in the band of 11.4- 11.7%.
Terex expects adjusted earnings per share to be between $5.85 and $6.25. The guidance indicates a 14% decline from adjusted earnings of $7.06 per share reported in 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -22.8% due to these changes.
VGM Scores
Currently, Terex has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Terex has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.