) is seeing strong demand in North America and strength across its
Aerial Work Platforms (AWP) and Cranes divisions. The heavy
equipment maker has produced an average earnings surprise of around
30% over the last four quarters and has seen its stock price rocket
roughly 58% year-to-date. It has put together four straight
quarters with positive earnings surprises, and is scheduled to
report third quarter results in less than two weeks.
With strong order backlog, healthy demand for rough terrain cranes
and a robust earnings growth projection for the year, this Zacks #1
Rank (Strong Buy) stock deserves the attention of aggressive growth
Q2 Sees Big Beat; Q3 Coming Up
On July 25, Terex reported a positive earnings surprise of 53.06%
for the second-quarter, as adjusted earnings of 75 cents per share
comfortably beat the Zacks Consensus Estimate of 49 cents. This
marked its fourth straight positive surprise.
Revenues spiked 35% year over year to $2,011.5 million. Gross
margins expanded to 21.3% from 14.4% a year ago. The company's
backlog for orders jumped 18% year over year to $2,076 million. The
healthy results sent shares higher by as much as 31%.
Sales from the core AWP segment soared roughly 25% to $605.7
million, boosted by higher demand in the North American rental
channel. The Construction segment reported a roughly 8% growth in
sales to $388.8 million. The division returned to profitability for
the first time since 2008, driven by strong demand in the emerging
markets of Russia, China and Latin America.
Revenues from the Cranes division rose around 4% to $484.2 million,
helped by strong demand for rough terrain cranes and all terrain
cranes in North America, the Middle East, Latin America and
The company beefed up its earnings forecast to between $1.95 and
$2.05 per share from the previous guidance of $1.65 to $1.85.
However, it narrowed the net sales target to between $7.5 billion
and $7.8 billion from the earlier view of $7.5 billion to $8
billion. Terex sees strength in the North American market, and
expects its AWP and Cranes units to position it for a continued
improved performance in the second half of 2012.
Terex is expected to report its third quarter results on October
22. The Zacks Consensus Estimate is currently at 49 cents per
Earnings Momentum Gains for 2012
The Zacks Consensus Estimate for 2012 has moved higher by 10% over
the last 90 days to $1.95 per share, suggesting an annualized
growth of roughly 325%.
Terex is currently trading at a forward P/E of 11.69x, on par with
the peer group average. The price-to-book of 1.25x is lower than
the peer group average of 1.57x. The company also sports a
price-to-sales (P/S) ratio of just 0.3, below the peer group
average of 0.7.
A Peek at the Chart
The price and consensus chart shows that earnings estimates are
hovering above the stock price, indicating that Terex is
undervalued. The strong earnings growth potential has been
portrayed by the gap between the estimate lines for each year from
2011 to 2014, something which should catch growth investors'
Founded in 1925, Terex Corporation is a global equipment maker
serving the construction, infrastructure and surface mining
industries. Its products include construction equipment, cranes,
aerial work platform equipment and mining equipment. The company
also offers a comprehensive range of financial products and
services. Its manufacturing facilities are located in the U.S.,
Canada, Europe, Australia, Asia and South America. Terex, which has
a market cap of roughly $2.5 billion, operates through four
segments and markets its products through a global distribution
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