On Sep 24, we upgraded our recommendation on global equipment
) to Neutral.
Why the Upgrade?
On Jul 24, Terex reported adjusted earnings of 65 cents per share
for the second quarter of 2013, down 13% from 75 cents earned in
the year-ago quarter but ahead of the Zacks Consensus Estimate of
54 cents. Revenues also declined 5% year over year to $1.91
billion, missing the Zacks Consensus Estimate of $1.99 billion.
Terex, a Zacks Rank #3 (Hold) stock, remains on track with
internal cost reduction initiatives in the Materials Handling and
Port Solutions (MHPS) and Crane businesses. The divestiture of
businesses and its focus on reducing overhead and complexity
within the Construction segment are expected to aid results going
Notably, MHPS will be benefited by significant revenue visibility
in 2014 given three large port automation projects (two at
Rotterdam and one at Long Beach) currently in the backlog. The
outlook for the Aerial Work Platform segment remains strong on
the back of encouraging replacement demand and equipment rental.
In addition, Terex boasts a strong cash flow and sticks to its
strategy of deleveraging by reducing debt and improve overall
capital structure. The company also remains committed to increase
its presence in developing markets.
However, Terex lowered its earnings per share guidance for 2013
to $1.90-$2.10 from $2.40-$2.70 due to softer market conditions
in its Construction, MHPS and to a lesser extent Cranes
businesses. Pricing pressure, slower-than-anticipated
construction recovery and adverse currency fluctuations will
likely remain headwinds for the company in the upcoming quarters.
Following the last earnings release, the Zacks Consensus Estimate
has gone up 1.5% to $2.00 per share for 2013, but is down 3.6%
for 2014 to $2.95 a share.
Other Stocks to Consider
Among the other stocks in the industrial products sector with
favorable Zacks rank,
Alamo Group, Inc.
Lonking Holdings Ltd.
) are worth a look. While Alamo Group holds a Zacks Rank #1
(Strong Buy), both Lonking and Lindsay carry a Zacks Rank #2
ALAMO GROUP INC (ALG): Free Stock Analysis
LINDSAY CORP (LNN): Free Stock Analysis
LONKING HOLDING (LONKF): Get Free Report
TEREX CORP (TEX): Free Stock Analysis Report
To read this article on Zacks.com click here.