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Why Is Terex (TEX) Down 4.8% Since Last Earnings Report?
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It has been about a month since the last earnings report for Terex (TEX - Free Report) . Shares have lost about 4.8% 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 Q2 Earnings & Sales Top Estimates, '23 View Raised
Terex reported second-quarter 2023 adjusted earnings per share of $2.35, which beat the Zacks Consensus Estimate of $1.61. The bottom line surged 120% from the prior-year quarter, courtesy of strong demand, higher pricing and gains from the company’s efforts to improve manufacturing efficiencies.
Operational Update
Revenues in the reported quarter increased 30% year over year to $1,403 million, surpassing the Zacks Consensus Estimate of $1,256 million. The upside was driven by increased demand across all regions and product lines, improved price realization, partially offset by unfavorable currency translation.
The company reported a backlog of $3.7 billion in the second quarter of 2023. The backlog, however, came in lower than our projection of $3.9 billion.
The cost of goods sold increased 22.7% year over year to $1,060 million. Gross profit surged 61% to $343 million. Selling, general and administrative expenses were $133 million in the quarter under review, up 22% from the prior-year quarter.
Terex reported an operating profit of $210 million, which marked a 102% increase from the prior-year quarter. Operating margin in the quarter under review was 15%, a 540 basis point expansion due to higher sales volume, price realization, favorable mix and improved manufacturing efficiencies. However, higher costs had a dampening effect.
Segment Performances
The Aerial Work Platforms segment generated revenues of $825 million in the reported quarter, up 38% from the year-ago quarter. Solid demand, higher pricing and easing of supply-chain disruptions led to the improvement in revenues.
The segment reported an operating profit of $134 million, a 189% jump from the prior-year quarter’s $46 million. Higher sales volume, price realization, favorable mix, gains from cost reduction initiatives and manufacturing efficiencies, partially offset by cost increases, led to the solid improvement in profit. We had expected revenues of $691 million and operating income of $86 million.
The Material Processing segment’s revenues totaled $577 million, reflecting year-over-year growth of 20%. Strong demand for the company’s products across multiple businesses and price realization drove the improvement. The segment’s revenues were higher than our estimate of $537 million.
The segment reported an operating income of $98 million, up 23 .5% year over year. The figure was higher than our estimate of $94 million. Gains from increased sales volume, favorable mix and improved manufacturing efficiencies were partially negated by cost increases.
Financial Position
Terex had cash and cash equivalents of $268 million as of Jun 30, 2023, compared with $304 million as of Dec 31, 2022. The company generated $130 million in cash from operating activities in the first six month period of 2023, marking a substantial improvement from $19 million reported in the prior-year comparable period. The company has returned $54 million to shareholders through share repurchases and dividends in the first half of fiscal 2023.
2023 Outlook
Backed by strong performance so far, this fiscal, Terex raised its outlook for 2023. The company expects earnings per share at around $7.00, higher than its earlier projection of $5.60-$6.00. The company expects sales at around $5.1 billion. Terex had earlier projected sales between $4.8 billion and $5 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 16.89% due to these changes.
VGM Scores
Currently, Terex has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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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Why Is Terex (TEX) Down 4.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Terex (TEX - Free Report) . Shares have lost about 4.8% 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 Q2 Earnings & Sales Top Estimates, '23 View Raised
Terex reported second-quarter 2023 adjusted earnings per share of $2.35, which beat the Zacks Consensus Estimate of $1.61. The bottom line surged 120% from the prior-year quarter, courtesy of strong demand, higher pricing and gains from the company’s efforts to improve manufacturing efficiencies.
Operational Update
Revenues in the reported quarter increased 30% year over year to $1,403 million, surpassing the Zacks Consensus Estimate of $1,256 million. The upside was driven by increased demand across all regions and product lines, improved price realization, partially offset by unfavorable currency translation.
The company reported a backlog of $3.7 billion in the second quarter of 2023. The backlog, however, came in lower than our projection of $3.9 billion.
The cost of goods sold increased 22.7% year over year to $1,060 million. Gross profit surged 61% to $343 million. Selling, general and administrative expenses were $133 million in the quarter under review, up 22% from the prior-year quarter.
Terex reported an operating profit of $210 million, which marked a 102% increase from the prior-year quarter. Operating margin in the quarter under review was 15%, a 540 basis point expansion due to higher sales volume, price realization, favorable mix and improved manufacturing efficiencies. However, higher costs had a dampening effect.
Segment Performances
The Aerial Work Platforms segment generated revenues of $825 million in the reported quarter, up 38% from the year-ago quarter. Solid demand, higher pricing and easing of supply-chain disruptions led to the improvement in revenues.
The segment reported an operating profit of $134 million, a 189% jump from the prior-year quarter’s $46 million. Higher sales volume, price realization, favorable mix, gains from cost reduction initiatives and manufacturing efficiencies, partially offset by cost increases, led to the solid improvement in profit. We had expected revenues of $691 million and operating income of $86 million.
The Material Processing segment’s revenues totaled $577 million, reflecting year-over-year growth of 20%. Strong demand for the company’s products across multiple businesses and price realization drove the improvement. The segment’s revenues were higher than our estimate of $537 million.
The segment reported an operating income of $98 million, up 23 .5% year over year. The figure was higher than our estimate of $94 million. Gains from increased sales volume, favorable mix and improved manufacturing efficiencies were partially negated by cost increases.
Financial Position
Terex had cash and cash equivalents of $268 million as of Jun 30, 2023, compared with $304 million as of Dec 31, 2022. The company generated $130 million in cash from operating activities in the first six month period of 2023, marking a substantial improvement from $19 million reported in the prior-year comparable period. The company has returned $54 million to shareholders through share repurchases and dividends in the first half of fiscal 2023.
2023 Outlook
Backed by strong performance so far, this fiscal, Terex raised its outlook for 2023. The company expects earnings per share at around $7.00, higher than its earlier projection of $5.60-$6.00. The company expects sales at around $5.1 billion. Terex had earlier projected sales between $4.8 billion and $5 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 16.89% due to these changes.
VGM Scores
Currently, Terex has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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.