Terex TEX has made an impressive leap of 39.5% in a year, leaving the industry’s 21% growth trailing in the dust. Putting the Industrial Products sector in the shade, Terex outran it by a significant margin, with a rise of 15.6%. Even against the Zacks S&P 500 composite’s 27% sprint in the same time frame, Terex is leading the pack.
Boasting a market capitalization of around $4 billion, Terex saw an average volume of shares traded at 953.7k in the last three months.
Terex currently carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
Strong Demand Driving Earnings Growth
Terex has been reaping the rewards of surging demand and improved volumes, with a clear indicator of year-over-year growth in earnings over the past 11 quarters. Pricing maneuvers and cost-cutting initiatives have helped offset supply-chain challenges and higher costs.
In the third quarter of 2023, Terex reported adjusted earnings per share of $1.75, marking a robust year-over-year jump of 45.8%. The company credited this outstanding performance to healthy demand across multiple businesses and improved price realization, effectively countering higher costs.
Buoyed by its stellar show in the third quarter, Terex raised its 2023 outlook, now expecting earnings per share to hit approximately $7.05. This is an upgrade from the earlier projection of $7.00 per share, and when compared with the adjusted earnings per share of $4.32 in 2022, the estimated figure underscores formidable growth of 63%. Terex also foresees sales reaching $5.15 billion, up from the previously projected sales of $5.1 billion.
Robust Backlog Bodes Well
TEX’s backlog at the end of the third quarter of 2023 stood at a substantial $3.3 billion, significantly surpassing historical levels and ranking as the second highest in recent history. Strong backlog, coupled with robust end-market demand, is anticipated to underpin Terex’s top-line performance in the forthcoming quarters. The company is also poised to benefit from increased expenditure arising from the Infrastructure Bill, adding further fuel to its fire.
Upbeat Growth Projections
The Zacks Consensus Estimate for the company’s 2023 earnings is positioned at $7.09 per share, signaling a commendable 64% growth from the year-ago tally. Meanwhile, the consensus mark for 2024 earnings currently stands at $7.20 per share, suggesting a year-over-year improvement of 1.6%.
Strategic Initiatives Continue to Bear Fruit
Terex has been successfully forging ahead with its “Execute, Innovate, Grow” strategy. In line with this, the company has been investing in innovative products, digital innovation, the expansion of manufacturing facilities, and acquisitions. These efforts are expected to fuel its performance in the upcoming quarters.
TEX’s endeavors to overcome supply disruptions and ramp up production are anticipated to give results a shot in the arm in the coming quarters. Price hikes and cost reductions are set to counter inflationary pressures and bolster earnings.
Solid Balance Sheet
As of Sep 30, 2023, the company boasted $846 million of total available liquidity and net leverage of 0.5X. Furthermore, Terex anticipates generating a free cash flow of $375 million in 2023, an impressive increase from cash flow of $152 million in 2022.
Stocks to Consider
Some better-ranked stocks from the Industrial Products sector are Resideo Technologies, Inc. REZI, Applied Industrial Technologies AIT, and A. O. Smith Corporation AOS.
REZI currently sports a Zacks Rank #1 (Strong Buy), while AIT and AOS carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Resideo Technologies’ 2023 earnings per share is locked in at $1.48. This consensus estimate has remained unchanged over the past 60 days. Noteworthy is the company’s trailing four-quarter average earnings surprise of 5.7%. REZI shares have climbed 15.6% year to date.
Applied Industrial has an impressive average trailing four-quarter earnings surprise of 15%. The Zacks Consensus Estimate for AIT’s 2023 earnings is positioned at $9.43 per share, indicating a solid year-over-year growth of 7.8%. Over the past 60 days, estimates have experienced a 4% uplift. The company’s shares have surged a notable 40% so far this year.
The Zacks Consensus Estimate for A. O. Smith’s 2023 earnings is set at $3.77 per share. Over the last 60 days, the consensus estimate for 2023 earnings has moved upwards by 5%, pointing to a year-over-year growth of 20.1%. AOS shares have seen a striking ascent of 45.6% year to date.
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Terex Corporation (TEX) : Free Stock Analysis Report
A. O. Smith Corporation (AOS) : Free Stock Analysis Report
Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report
Resideo Technologies, Inc. (REZI) : 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.
