Terex Corporation
TEX
$60.82
+4.97%
Terex Corporation is a global manufacturer of specialized equipment, operating primarily in the industrials sector with a focus on aerial work platforms, materials processing machinery, and specialty equipment for waste, recycling, and utility industries. The company has established itself as a focused niche player in light construction and vocational equipment, having strategically divested underperforming businesses like cranes to concentrate on higher-margin segments. The current investor narrative centers on the company's cyclical recovery and margin expansion story, driven by robust demand in non-residential construction and infrastructure, as evidenced by recent quarterly revenue growth and a significant year-over-year stock price appreciation, though recent price volatility suggests debate over the sustainability of this cyclical upswing.…
TEX
Terex Corporation
$60.82
Investment Opinion: Should I buy TEX Today?
Rating: Hold. The core thesis is that TEX is a fundamentally recovering cyclical trading at a reasonable valuation, but near-term momentum has stalled and key metrics show deceleration, warranting caution before establishing new positions. Supporting Evidence: The stock trades at a forward P/E of 10.59x, a 33% discount to its trailing P/E of 15.89x, reflecting expected EPS growth to $6.68. It boasts strong financial health with a current ratio of 2.30 and robust TTM FCF of $322M. Analyst consensus implies a 16% upside to ~$70.70, and the P/S ratio of 0.65 is low for a profitable industrial. However, Q4 revenue declined 6.2% sequentially and gross margins compressed, introducing uncertainty to these forward estimates. Risks & Conditions: The two biggest risks are a continuation of the revenue/margin deceleration trend and a broader cyclical downturn triggered by macro weakness. This Hold rating would upgrade to a Buy if the stock pulls back to the low-$50s (offering a larger margin of safety) and/or Q1 2026 results show a reacceleration of revenue growth and stabilization of gross margins above 19%. It would downgrade to Sell if quarterly revenue growth turns negative year-over-year or if forward EPS estimates are cut meaningfully. Relative to its history and peers, the stock appears fairly valued to slightly undervalued, but this discounts its cyclical risks.
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TEX 12-Month Price Forecast
TEX presents a balanced risk/reward profile. The company has executed a strong operational turnaround and is financially healthy, but it is now showing classic signs of a late-cycle peak with decelerating top-line growth and margin pressure. The base case of range-bound trading around analyst targets is most probable, as the market grapples with the timing of the next cyclical turn. The stance would upgrade to bullish on evidence of reaccelerating growth and margin expansion, supported by concrete quarterly data. It would turn bearish if revenue growth turns negative, confirming the downturn thesis. Investors should be prepared for high volatility given the stock's beta.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Terex Corporation's 12-month outlook, with a consensus price target around $79.07 and implied upside of +30.0% versus the current price.
Average Target
$79.07
6 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
6
covering this stock
Price Range
$49 - $79
Analyst target range
Analyst coverage for Terex is moderate, with 6 analysts providing estimates, indicating steady institutional interest. The consensus sentiment leans bullish, as evidenced by recent institutional rating actions including upgrades to 'Buy' from Citigroup and 'Overweight' from Morgan Stanley in late 2025 and early 2026. The average target price must be derived from estimates; using the average EPS estimate of $6.68 and the forward PE of 10.59x implies a consensus price target of approximately $70.70, which would represent a potential upside of about 16% from the current price of $60.82. The target range, inferred from EPS estimates, is wide, with a low EPS of $5.89 and a high of $7.22, translating to price targets from roughly $62.40 to $76.40 using the forward multiple. The high end of the range likely assumes successful execution on margin expansion and sustained demand across its segments, while the low end may factor in a sharper-than-expected cyclical slowdown or margin compression. The recent mix of rating actions—including both upgrades and reaffirmations—alongside a meaningful spread between low and high targets, reflects a healthy debate on the near-term outlook but overall positive conviction in the company's fundamental story.
Bulls vs Bears: TEX Investment Factors
The investment debate for TEX centers on the sustainability of its cyclical recovery versus clear signs of a potential peak. Bullish evidence is stronger, anchored by a powerful earnings turnaround, robust cash flow, and compelling valuation metrics that offer a margin of safety. However, bearish concerns are significant and data-driven, focusing on the sequential deterioration in revenue and margins—the most critical tension in the thesis. The resolution of this tension—whether the recent deceleration is a temporary pause or the beginning of a cyclical downturn—will determine if the stock can realize its earnings growth potential and analyst target upside, or if it faces valuation compression from its already discounted levels.
Bullish
- Strong Earnings Recovery & Growth: TEX swung from a net loss of $2M in Q4 2024 to a net income of $63M in Q4 2025, a significant turnaround. The forward P/E of 10.59x, based on an average EPS estimate of $6.68, implies the market expects substantial earnings growth, representing a major discount to the trailing P/E of 15.89x.
- Robust Cash Generation & Financial Health: The company generated $322M in TTM free cash flow, providing a strong FCF yield. This, combined with a solid current ratio of 2.30, indicates ample liquidity to fund operations, service its moderate debt (D/E of 1.34), and pursue growth without external financing stress.
- Attractive Relative Valuation: TEX trades at a trailing P/E of 15.89x, below typical industrial machinery peers, and a low Price-to-Sales ratio of 0.65. Historically, its P/E is near the middle-to-lower end of its own range, which has seen peaks above 30x, suggesting a margin of safety if growth materializes.
- Analyst Conviction & Upside Potential: Analyst consensus implies a price target of ~$70.70, offering ~16% upside from $60.82. Recent upgrades from major firms like Citigroup and Morgan Stanley to 'Buy' and 'Overweight' reflect positive conviction in the company's execution and cyclical recovery story.
Bearish
- Significant Revenue & Margin Deceleration: Q4 2025 revenue of $1.318B declined sequentially from $1.387B in Q3 and $1.487B in Q2. Gross margin also compressed to 18.82% in Q4 from 20.33% in Q3, signaling potential cyclical peaking and cost pressures that could threaten the earnings growth story.
- High Volatility & Recent Consolidation: With a beta of 1.64, TEX is 64% more volatile than the market, amplifying downside risk. Recent short-term momentum has stalled, with the stock up only 0.71% over 3 months and showing negative relative strength of -3.80 vs. SPY over 1 month, suggesting a loss of momentum.
- Cyclical Business Model Risk: As a manufacturer tied to non-residential construction and infrastructure, TEX's fortunes are highly cyclical. The sequential revenue decline and margin compression are classic late-cycle indicators, raising the risk of a downturn that would compress its currently low valuation multiples further.
- Valuation Discount Reflects Inherent Risk: The stock's low P/S of 0.65 and forward P/E of 10.59x, while attractive, are a direct reflection of the market pricing in its cyclicality and high volatility. This discount may persist or widen if the economic cycle turns, limiting multiple expansion potential.
TEX Technical Analysis
The stock is in a sustained long-term uptrend, evidenced by a formidable 76.29% one-year price change. With a current price of $60.82, it is trading approximately 85% of the way up from its 52-week low of $33.13 toward its high of $71.5, indicating strong momentum but also positioning it closer to a key resistance level where further gains may become more challenging. The short-term momentum, however, shows signs of deceleration and volatility; the stock gained only 3.56% over the past month and a mere 0.71% over three months, a stark contrast to its powerful yearly performance and a negative relative strength of -3.80 against the SPY over one month, suggesting a potential consolidation or pullback phase within the broader uptrend. Recent price action has been volatile, with the stock experiencing a sharp rally to near its 52-week high in February 2026 before pulling back, as seen in the price data where it reached $69.51 on February 17th before declining. Key technical levels are clearly defined, with immediate resistance at the 52-week high of $71.5 and support at the yearly low of $33.13, though more immediate support may be found around the $57-$58 level from recent trading. A beta of 1.64 indicates the stock is approximately 64% more volatile than the broader market, which is critical for risk assessment as it implies amplified moves both upwards and downwards, consistent with the observed price swings and a maximum drawdown of -28.56% over the provided period.
Beta
1.64
1.64x market volatility
Max Drawdown
-28.6%
Largest decline past year
52-Week Range
$33-$72
Price range past year
Annual Return
+76.3%
Cumulative gain past year
| Period | TEX Return | S&P 500 |
|---|---|---|
| 1m | +3.6% | +9.5% |
| 3m | +0.7% | +2.7% |
| 6m | +14.7% | +5.8% |
| 1y | +76.3% | +34.9% |
| ytd | +10.5% | +4.1% |
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TEX Fundamental Analysis
Revenue growth has been positive but shows signs of sequential deceleration; Q4 2025 revenue was $1.318 billion, representing a 6.2% year-over-year increase, yet this marks a decline from the $1.387 billion and $1.487 billion reported in Q3 and Q2 2025, respectively. Segment data indicates the business is diversified, with Aerial Work Platforms ($839M) and Utility Products ($1.3B) being the largest contributors, suggesting growth is broadly based but subject to cyclical end-market demand. The revenue trend implies the company is benefiting from a strong industrial cycle, though the recent quarterly declines warrant monitoring for a potential peak in the cycle. Profitability is solid and margins have shown improvement from a weak prior-year quarter. Q4 2025 net income was $63 million, a significant recovery from a net loss of $2 million in Q4 2024. The gross margin for the quarter was 18.82%, which, while improved year-over-year, has compressed from the 20.33% and 19.64% seen in the preceding two quarters, indicating potential cost pressures or mix shifts. The company's net margin stands at 4.08% (from valuation data), and operating margin is 8.76%, reflecting a profitable operation that has successfully navigated past a downturn. The balance sheet shows moderate leverage with a debt-to-equity ratio of 1.34, indicating a leveraged but manageable capital structure. Financial health is supported by strong liquidity, with a current ratio of 2.30. Most importantly, the company is generating substantial cash, with free cash flow over the trailing twelve months reported at $322 million, yielding a healthy FCF yield based on its market cap. This robust cash generation, coupled with a return on equity of 10.55%, suggests the company can fund its operations and growth internally while servicing its debt, reducing financial risk.
Quarterly Revenue
$1.3B
2025-12
Revenue YoY Growth
+0.06%
YoY Comparison
Gross Margin
+0.18%
Latest Quarter
Free Cash Flow
$322000000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is TEX Overvalued?
Given a positive net income, the primary valuation metric is the Price-to-Earnings (PE) ratio. Terex trades at a trailing PE of 15.89x and a forward PE of 10.59x based on estimated EPS. The significant discount of the forward multiple implies the market anticipates substantial earnings growth, aligning with analyst EPS estimates averaging $6.68 for the coming period, a major increase from the most recent quarterly EPS of $0.96. Compared to sector averages, Terex's valuation presents a mixed picture. Its trailing PE of 15.89x is below the typical industrial machinery average (often in the low 20s), suggesting a relative discount. This discount is more pronounced on a Price-to-Sales basis, with a PS ratio of 0.65, which is generally considered low for a profitable industrial manufacturer. The discount may be attributed to the stock's cyclical nature and higher volatility (beta of 1.64), but it could also represent a value opportunity if the earnings growth materializes as forecasted. Historically, the stock's current trailing PE of 15.89x sits well below its own historical range observed in the data, which has seen peaks above 30x and even negative values during loss-making periods. For instance, in Q1 2025, the PE was 30.09, and it was negative in Q4 2024. Trading near the middle-to-lower end of its historical PE band suggests the market is not pricing in overly optimistic expectations, potentially providing a margin of safety if the company executes on its growth trajectory.
PE
15.9x
Latest Quarter
vs. Historical
High-End
5-Year PE Range -385x~30x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
8.8x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks stem primarily from TEX's cyclical exposure and recent margin pressure. While the debt-to-equity ratio of 1.34 is manageable, the company's profitability is highly sensitive to end-market demand. The sequential decline in quarterly revenue from $1.487B in Q2 2025 to $1.318B in Q4, coupled with gross margin compression from 20.33% to 18.82% over the same period, indicates operational headwinds. If this trend continues, the projected EPS growth to $6.68 may not materialize, jeopardizing the forward P/E valuation premise and potentially straining cash flow generation from the current robust $322M TTM level. Market & Competitive Risks are elevated due to TEX's high beta of 1.64, which implies amplified downside during market corrections or sector rotations away from cyclicals. The stock's valuation, while discounted relative to peers, offers limited protection if the industrial cycle turns definitively. Furthermore, the stock trades at a significant 85% of the way to its 52-week high, increasing the risk of a technical pullback. Competitive pressures in the fragmented machinery market could intensify if demand softens, forcing price concessions that would further pressure the already declining gross margins. Worst-Case Scenario involves a sharp cyclical downturn in non-residential construction and infrastructure spending, triggering order cancellations and inventory corrections. This would lead to significant earnings misses relative to the $6.68 EPS estimate, multiple compression below its current forward P/E of 10.59x, and a rapid re-rating towards its 52-week low of $33.13. Given the stock's high volatility and recent maximum drawdown of -28.56%, a realistic adverse scenario could see a decline of 35-45% from the current price, retesting the low-$40s to mid-$30s range, representing a loss of over $20 per share.
FAQ
The key risks are, in order of severity: 1) Cyclical Downturn Risk: Revenue has already shown sequential declines, and a broader slowdown in non-residential construction could severely impact earnings. 2) High Volatility: With a beta of 1.64, the stock is prone to sharp swings, increasing portfolio risk. 3) Margin Compression: Gross margin fell to 18.82% in Q4 from 20.33% in Q3; sustained pressure would hurt profitability. 4) Execution Risk: The investment thesis relies on the company hitting an average EPS of $6.68; any miss could lead to a sharp de-rating given the stock's recent run-up.
The 12-month forecast is a range of outcomes with a base case target of $65-$72 (50% probability), a bull case of $72-$78 (30%), and a bear case of $40-$55 (20%). The base case, which is most likely, assumes the company delivers on consensus EPS of ~$6.68 and the stock trades around its current forward multiple, aligning with the average analyst implied target near $71. The key assumption is that the industrial cycle moderates but does not break, allowing TEX to maintain stable profitability. The wide range reflects the stock's high beta and cyclical uncertainty.
TEX appears fairly valued to slightly undervalued based on forward earnings, but this discounts significant cyclical risk. Its forward P/E of 10.59x is low relative to both industrial sector peers and its own historical P/E range, which has seen peaks above 30x. The Price-to-Sales ratio of 0.65 is also very low. This valuation implies the market expects only moderate growth and is pricing in a high degree of uncertainty about the cycle. Therefore, it is not cheap without reason; it is fairly valued for a stock at a potential cyclical inflection point.
TEX is a conditional buy for risk-tolerant investors. At a forward P/E of 10.59x and with analyst targets implying ~16% upside, the valuation is attractive for a company generating $322M in annual free cash flow. However, it is not a clear-cut good buy today due to concerning signals: revenue has declined for two consecutive quarters and gross margins are compressing. It becomes a more compelling buy on a pullback to the low-$50s, which would offer a larger margin of safety against cyclical risks, or upon evidence of operational reacceleration in upcoming earnings.
TEX is more suitable for a medium-term investment horizon of 1-3 years rather than long-term buy-and-hold or short-term trading. Its cyclical nature means its performance is tied to the economic cycle, making it less predictable over decades. The high beta of 1.64 makes it risky for short-term trading due to amplified volatility. A medium-term horizon allows investors to potentially capture the remainder of the current up-cycle and the company's margin expansion story, while being alert to exit signs of a downturn. A minimum holding period of 12-18 months is suggested to navigate through quarterly volatility and assess the cycle's direction.