Terex Corporation TEX looks promising at the moment on positive market dynamics, backlog strength and momentum in its segments. We are positive on the company’s prospects and believe this is the right time to add the stock to your portfolio, as it is poised to carry the bullish momentum ahead.
Terex currently has a Zacks Rank #1 (Strong Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 or 2 (Buy), offer the best investment opportunities for investors.
Let’s delve deeper and analyze the factors that make Terex an attractive investment option.
What’s Working in Favor of Terex?
Solid Q4: Terex reported fourth-quarter 2018 adjusted earnings per share of 51 cents, beating the Zacks Consensus Estimate of 46 cents by a margin of 11%. Additionally, earnings jumped 55% year over year. Revenues also improved 16% year over year to $1.23 billion in the quarter beating the Zacks Consensus Estimate of $1.2 billion. Terex’s backlog grew year over year across every segment in the fourth quarter of 2018. Its total segment backlog climbed 19% year over year in the quarter. Consequently, improving backlog and an impressiveglobal marketenvironment, positions the company well for 2019.
Upbeat Guidance: Terex expects to achieve earnings per share between $3.60 and $4.20 in 2019, reflecting year-over-year improvement of 45%. This is likely to be aided by higher backlog, impressive global markets growth, focus on Execute to Win strategy, and capital allocation. The company projects net sales of around $4.7 billion.
Ahead of the Industry: Terex has outperformed the industry with respect to price performance year to date. Shares of the company have gained around 16.6%, while the industry registered growth of 7.3%.
Impressive Surprise History: Terex outpaced the Zacks Consensus Estimate in three of the trailing four quarters. The company has average positive earnings surprise of 14.77%.
Estimates Moving Up: Annual estimates for Terex have moved up in the past 60 days, reflecting analysts’ confidence in the stock, following upbeat fourth-quarter results. During this period, the Zacks Consensus Estimate for 2019 moved up nearly 10% to $3.83. The Zacks Consensus Estimate for 2020 also moved north by 6% to $3.92.
Healthy Growth Projections: For 2019, the Zacks Consensus Estimate is currently pegged at $3.83, reflecting year-over-year growth of 41.3%. The same for 2020 is pegged at $3.92, indicating year-over-year growth of 2.5%.
Growth Drivers: The company is well poised to benefit from the continued implementation of Execute to Win initiatives in 2019. Terex’s Execute to Win strategy is focused on improving capabilities by investing in people, processes and tools in three priority areas, comprising commercial excellence, lifecycle solutions and strategic sourcing.
Terex’s Aerial Work Platforms segment will gain from strong global markets, operational execution and innovation. Macroeconomic fundamentals and customers’ feedback hint at a multi-year growth period for this segment. With favorable markets and a significantly higher backlog than last year, the Material Processing (MP) segment is well poised for growth in 2019. Further, rising global demand for crushing and screening equipment, spurred by economic growth, construction activity and aggregate consumption, bodes well. Demand for Fuchs, material handlers and broad line of environmental products continues to rise in global markets, and is anticipated to fuel the segment’s growth.
It has estimated long-term earnings growth rate of 9.4%.
Other Stocks to Consider
Some top-ranked stocks in the same sector are Lawson Products, Inc. LAWS, DMC Global Inc. BOOM and CECO Environmental Corp. CECE. While Lawson Products sports a Zacks Rank #1, DMC Global and CECO Environmental carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Lawson Products has a long-term earnings growth rate of 17.5%. Its shares have moved up 29% in the past year.
DMC Global has a long-term earnings growth rate of 20%. The stock has risen 96% in a year’s time.
CECO has a long-term earnings growth rate of 15%. The company’s shares have gained around 62% in the past year.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
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Terex Corporation (TEX): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.