On Jan 18, we maintained our Neutral recommendation on global
equipment manufacturer
Terex Corp.
(
TEX
) following a decent third-quarter 2012 results, impressive
expansion opportunities, margin expansion, strong outlook for
Aerial Works Platform, partially offset by decline in backlog and
soft demand conditions in Europe.
Why Reiterated?
The company's third-quarter 2012 adjusted earnings were 62
cents per share, more than double the 30 cents earned in the
year-ago quarter; and comfortably ahead of the Zacks Consensus
Estimate of 50 cents. Total revenue increased 1% year over year
to $1.8 billion, missing the Zacks Consensus Estimate of $1.9
billion.
We appreciate Terex's focused on expanding its global
presence, especially in developing nations such as China, India,
Brazil, Russia and the Middle East with the company currently
deriving 35% of its revenues from these markets. The company has
also restructured its business portfolio, transforming from a
mining and construction equipment company to a more diverse
manufacturer of capital goods machinery with strong market
positions in specialty areas.
The company remains focused on improving its margins. Pricing
discipline, reduced interest due to recent refinancing efforts,
savings from Demag Cranes will continue to aid margins next year
as well.
The outlook for Aerial Work Platform segment remains strong on
the back of strong replacement demand and equipment rental.
Furthermore, the U.S. residential construction is finally
stabilizing and the company is on the road to a much-awaited
recovery. This bodes well for Terex's performance going
ahead.
However, at the end of the third quarter, total backlog stood
at $1.7 billion, representing a decline of 17% sequentially and
20% year over year. Within AWP, backlog declined 32% year over
year and the company cited order timing and seasonality for the
weak orders. Backlog levels within the Construction segment,
Crane segment and Materials Processing segment saw 52%, 10% and
30% annual declines, respectively, mostly due to weakness in
Europe. Terex's significant exposure (around 30%), to Europe
might affect results of the company.
Given near-term uncertainty due to macro events and order
timing, Terex lowered its guidance for 2012 revenues to $7.5
billion from its earlier range of $7.5-$8 billion.
Other Stocks to Consider
Other stocks to consider in the machinery industry are
Altra Holdings, Inc.
(
AIMC
), which holds a Zacks Rank #1 (Strong Buy) and
Gorman-Rupp Co.
(
GRC
),
Kaman Corporation
(
KAMN
), which hold Zacks Rank #2 (Buy).
Other stocks to consider in the machinery industry are Altra
Holdings, Inc. (AIMC), which holds a Zacks Rank #1 (Strong Buy)
and Gorman-Rupp Co. (GRC), Kaman Corporation (KAMN), which hold
Zacks Rank #2 (Buy).
On Jan 18, we have maintained our Neutral recommendation on
global equipment manufacturer Terex Corp. (TEX) following a
decent third-quarter 2012 results, impressive expansion
opportunities, margin expansion, strong outlook for Aerial Works
Platform, partially offset by decline in backlog and soft demand
conditions in Europe.
Why Reiterated?
The company's third-quarter 2012 adjusted earnings were 62
cents per share, more than double the 30 cents earned in the
year-ago quarter; and comfortably ahead of the Zacks Consensus
Estimate of 50 cents. Total revenue increased 1% year over year
to $1.8 billion, missing the Zacks Consensus Estimate of $1.9
billion.
We appreciate Terex's focused on expanding its global
presence, especially in developing nations such as China, India,
Brazil, Russia, and the Middle East with the company currently
deriving 35% of its revenues from these markets. The company has
also restructured its business portfolio, transforming from a
mining and construction equipment company to a more diverse
manufacturer of capital goods machinery with strong market
positions in specialty areas.
The company remains focused on improving its margins. Pricing
discipline, reduced interest due to recent refinancing efforts,
savings from Demag Cranes will continue to aid margins next year
as well.
The outlook for Aerial Work Platform segment remains strong on
the back of strong replacement demand and equipment rental.
Furthermore, the U.S. residential construction is finally
stabilizing and the company is on the road to a much-awaited
recovery. This bodes well for Terex's performance going
ahead.
However, at the end of the third quarter, total backlog stood
at $1.7 billion, representing a decline of 17% sequentially and
20% year over year. Within AWP, backlog declined 32% year over
year and the company cited order timing and seasonality for the
weak orders. Backlog levels within the Construction segment,
Crane segment, and Materials Processing segment saw 52%, 10% and
30% annual declines, respectively, mostly due to weakness in
Europe. Terex's significant exposure (around 30%), to Europe
might affect results of the company.
Given near-term uncertainty due to macro events and order
timing, Terex lowered its guidance for 2012 revenues to $7.5
billion from its earlier range of $7.5-$8 billion.
Other stocks to consider
ALTRA HOLDINGS (AIMC): Free Stock Analysis
Report
GORMAN RUPP CO (GRC): Free Stock Analysis
Report
KAMAN CORP A (KAMN): Free Stock Analysis
Report
TEREX CORP (TEX): Free Stock Analysis Report
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