On Mar 18, we issued an updated research report on Terex Corporation TEX. The company is well positioned to deliver stellar 2019 results, driven by its focus on the Execute to Win strategy, favorable global markets, backlog strength and capital-allocation strategy.
Terex’s fourth-quarter 2018 adjusted earnings per share and revenues climbed 55% and 16% respectively, on a year-over-year basis, and also beat the respective consensus mark.
Terex’s shares have lost 14.2%, over the past year, compared to the industry’s decline of 13.6%.
Upbeat 2019 Guidance
Terex expects to achieve EPS between $3.60 and $4.20 in the current year, reflecting year-over-year improvement of 45%. The company projects net sales of around $4.7 billion. Moreover, it is well on track to conclude the Demag Mobile Crane sale and exit the mobile-crane product lines in 2019, which will likely drive Terex's operating results.
Terex to Gain From Execute to Win Strategy
Terex’s Execute to Win strategy is focused on boosting capabilities by investing in people, processes and tools in three priority areas, comprising commercial excellence, lifecycle solutions and strategic sourcing. The company is well poised to benefit from the continued implementation of Execute to Win initiatives in 2019. For this, it has approved an investment in its Utilities business to build a new facility in Watertown. This state-of-the-art manufacturing center meets the growing needs of utility customers.
Capital Allocation to Boost Performance
Terex continues to execute its disciplined capital-allocation strategy. In 2018, the company repurchased 11.4 million shares and returned $425 million to shareholders. Last July, it announced the completion of the February 2018 authorization and its board of directors authorized repurchase of up to an additional $300 million of Terex’s outstanding shares of common stock. Management has approved the 10% hike of its quarterly dividend to 11 cents in 2019.
AWP, MP Segments to Stoke Growth
Terex’s Aerial Work Platforms (AWP) segment will gain from strong global markets, operational execution and innovative new products. Macroeconomic fundamentals and customers’ feedback all hint toward a multi-year growth period for this segment. The company expects that its AWP segment, which now includes Terex Utilities, will achieve an operating margin of 10.5-11.5% in 2019, while net sales are estimated to be up 3-6% on a comparative basis, with a mid-point of approximately $3.1 billion. Therefore, the AWP segment’s prospects look bright for the ongoing year.
With upbeat 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, which is anticipated to fuel this segment’s growth. The segment’s operating margin is projected at 13-13.5% for 2019, while sales growth is estimated to be up 2-6% on a comparative basis.
Higher Backlog to Propel Growth
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. The AWP segment entered 2019 with a backlog, including utilities, of $1.1 billion, up 21% from the prior-year quarter. Further, backlog soared 55% year over year in the MP segment, reflecting robust market momentum. Consequently, improving backlog, along with an impressive global market environment, positions the company well for 2019.
Terex Corporation Price and Consensus
Terex Corporation Price and Consensus | Terex Corporation Quote
Zacks Rank and Other Stocks to Consider
Terex currently sports a Zacks Rank #1 (Strong Buy).
Some other similarly-ranked stocks in the Industrial Products sector are Mueller Industries, Inc MLI, Lawson Products, Inc. LAWS and Albany International Corp. AIN. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mueller Industries has an expected earnings growth rate of 2.2% for 2019. The company’s shares have rallied 19.2%, over the past year.
Lawson Products has an impressive projected earnings growth rate of 102.5% for the current year. The stock has appreciated 17.2% in a year’s time.
Albany International has an estimated earnings growth rate of 44.7% for the ongoing year. The company’s shares have gained 11.2%, in the past year.
Zacks' Top 10 Stocks for 2019
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