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What Terex is up to

Terex, No. 3 after Caterpillar and Komatsu, is another infrastructure buy that may benefit from the upcoming Obama Bonanza. Terex’s latest doing: Consolidating its compact-equipment line and folding the ASV brand, which it acquired in 2008. More at

A Forbes writer likes other parts of Terex’s business:

Terex Corp. is a construction-equipment manufacturer that specializes in cranes and aerial platforms (those work stands that scissor up into the air). It also makes concrete and asphalt paving equipment for constructing and maintaining roads and bridges. Terex’s stock climbed steadily from 2003 to mid-2007, but it has sunk like a stone since then as investors began to anticipate a slowdown. Although third-quarter revenue of $2.5 billion was up 14% from 2007, net income fell by 38% to $94 million, or 96 cents per share.

Nonetheless, Terex remains extremely profitable. Excluding additional restructuring charges, full-year earnings, which will be reported in February, should be near $570 million, or $5.70 a share. Still, management has been reducing head count in anticipation of a slowdown, and, given the recession, analysts are reducing their earnings estimates. They currently project only $4.05 per share for 2009. But if Obama’s spending plan gets off the ground, Terex will easily beat that. At two times trailing earnings and only 14% of revenues, it’s a steal. The average price/sales ratio over the past decade has been 50%.

Terex ticker: Tex.

3 comments | Permalink | Tags:
Tom Mangan posted at 9:24 am January 2nd, 2009 |

3 Responses to 'What Terex is up to'

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  1. Dan Hubbell says:

    It’s interesting that you should mention Terex. Morningstar, MarketWatch, Motley Fool etc. have had glowing analyses of it. As an infrastructure buy, as you say, I’ve been scratching my chin about TEX vs. CAT, and thinking it may be largely a question of large-cap vs. mid- or small-cap. Another interesting one in the latter categories is Manitowoc (MTW).

    Permalink | Posted January 2nd, 2009, at 10:25 am
  2. admin says:

    Cat could conceivably be a victim of its own bigness compared to smaller, presumably more nimble competitors. Seems like it’d be harder to add 5 percent to Cat’s sales than it would be to add the same percent to Terex’s.

    Permalink | Posted January 2nd, 2009, at 10:30 am
  3. Alphahunter says:

    It may be that TEX, as a smaller player, benefitted proportionally more than CAT and Komatsu from the bottleneck in equipment supply in the last two / three years. Now that we are in a downturn with excess suply, the larger players may pick up the bulk of incremental net orders.

    Permalink | Posted January 23rd, 2009, at 7:26 am

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