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Why Is Terex (TEX) Down 0.8% Since Last Earnings Report?

A month has gone by since the last earnings report for Terex (TEX). Shares have lost about 0.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Terex due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Terex Q1 Earnings & Revenues Beat Estimates, View Raised

Terex Corporation reported first-quarter 2023 adjusted earnings per share of $1.60, which beat the Zacks Consensus Estimate of $1.05. The bottom line surged 116% from the prior-year quarter, courtesy of strong demand and a healthy backlog.

Operational Update

Revenues in the reported quarter increased 23.2% year over year to $1,236 million, surpassing the Zacks Consensus Estimate of $1,134 million. The upside was driven by increased demand, higher volumes, and improved price realization, partially offset by unfavorable currency translation.

The company reported a backlog of $4.1 billion in the first quarter of 2023.
The cost of goods sold increased 17.2% year over year to $957 million. Gross profit improved 49.8% to $279 million.

Selling, general and administrative expenses (SG&A) were $131 million in the quarter under review, up 17.7% from the prior-year quarter. Terex reported an operating profit of $148 million, which marked a 98% increase from the prior-year quarter.

Segmental Performances

The Aerial Work Platforms segment generated revenues of $686 million in the reported quarter, up 24.4% from the year-ago quarter. The segment reported an operating profit of $83.1 million compared with the prior-year quarter’s $32.5 million.

The Material Processing segment’s revenues totaled $554 million, reflecting year-over-year growth of 22.3%. The segment reported an operating income of $85.3 million, up 32.2%.

Financial Position

Terex had cash and cash equivalents of $254 million as of Mar 31, 2023, compared with $218 million as of Mar 31, 2022. The company generated $9.1 million of cash from operating activities in 2022 against an outflow of $51.7 million in the prior year quarter.

2023 Outlook

Backed by strong performance in the first quarter, Terex raised its 2023 outlook. The company expects earnings per share between $5.60 and $6 .00, up from the previously disclosed $4.60-$5 .00. The company expects sales between $4.8 billion and $5 billion compared with the previously stated $4.6-$4.8 billion.

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How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

The consensus estimate has shifted 21.76% due to these changes.

VGM Scores

At this time, Terex has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Terex has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

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