Terex
TEX
$62.84
+1.00%
Terex Corporation is a global manufacturer of aerial work platforms, materials processing equipment, and specialty equipment for the waste, recycling, and utility industries. The company has strategically divested underperforming businesses to focus on light construction and vocational equipment, positioning itself as a niche player in nonresidential construction, aggregates/mining, and environmental end markets. The current investor narrative centers on Terex's ability to sustain growth amid mixed end-market demand, with attention on margin expansion and cash flow generation following recent operational improvements. Debate persists around the cyclicality of its construction and mining exposures and the potential for further portfolio optimization.…
TEX
Terex
$62.84
Investment Opinion: Should I buy TEX Today?
Rating: Buy. Terex offers a compelling risk/reward at current levels, supported by a forward P/E of 12.0x, strong free cash flow, and analyst consensus upside of 13.8% to the average target of $79.46. The company's focus on infrastructure and construction end markets provides secular demand drivers, while its healthy balance sheet and cash generation enable shareholder returns.
Supporting Evidence: The forward P/E of 12.0x is a 25% discount to the trailing P/E of 15.9x, implying earnings growth. Revenue grew 6.2% YoY in Q4 2025, and free cash flow of $322 million TTM provides a 9.2% FCF yield. The P/S ratio of 0.65x is low, and the EV/EBITDA of 8.9x is reasonable. ROE of 10.5% indicates decent capital efficiency. Compared to the machinery industry average P/E of ~18x, Terex trades at a discount.
Risks & Conditions: The primary risks are margin compression and cyclical demand. If gross margins fall below 18% or revenue growth turns negative, the thesis would weaken. This Buy would upgrade if margins stabilize and revenue accelerates, or downgrade to Hold if sequential declines persist. Overall, Terex appears fairly valued relative to its history but undervalued relative to its forward earnings potential, making it an attractive buy for value-oriented investors.
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TEX 12-Month Price Forecast
Terex's outlook is cautiously bullish given its attractive valuation and cash flow generation. The base case of moderate growth and stable margins is most likely, with the stock trading near the average target. Upside catalysts include margin improvement and infrastructure spending, while downside risks center on cyclical weakness. The stance would upgrade to strongly bullish if margins expand, or downgrade to neutral if revenue growth turns negative.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Terex's 12-month outlook, with a consensus price target around $79.46 and implied upside of +26.4% versus the current price.
Average Target
$79.46
0 analysts
Implied Upside
+26.4%
vs. current price
Analyst Count
—
covering this stock
Price Range
$67 - $100
Analyst target range
Terex is covered by 12 analysts, with a consensus recommendation of 'Buy' (mean rating 2.0 on a 1-5 scale where 1 is Strong Buy). The average target price is $79.46, implying approximately 13.8% upside from the current price of $69.83. The distribution shows a bullish lean, with recent upgrades from Citigroup (to Buy) and Morgan Stanley (to Overweight). The target range spans from $66.50 (low) to $100.00 (high). The high target of $100 assumes significant multiple expansion or accelerated growth, possibly driven by stronger construction demand or margin recovery. The low target of $66.50 suggests downside risk from cyclical headwinds or margin compression. The spread of $33.50 indicates moderate uncertainty, but the consensus leans positive. Recent rating actions show upgrades, reinforcing the bullish sentiment.
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Bulls vs Bears: TEX Investment Factors
Terex presents a mixed investment case. On the bull side, the company benefits from solid revenue growth, strong free cash flow generation, and an attractive forward valuation with analyst consensus supporting upside. However, bears point to persistent margin compression, sequential revenue deceleration, and high cyclicality. The most critical tension is whether Terex can stabilize or reverse its margin decline while maintaining revenue growth. If margins improve, the stock could re-rate higher; if they continue to compress, earnings may disappoint. Currently, the bull case has slightly stronger evidence given the valuation support and cash flow strength, but margin trends warrant close monitoring.
Bullish
- Strong Revenue Growth Trajectory: Q4 2025 revenue of $1.318 billion grew 6.2% year-over-year, demonstrating continued demand despite sequential declines. The company's focus on nonresidential construction and infrastructure end markets provides a solid growth foundation.
- Healthy Free Cash Flow Generation: Terex generated $322 million in free cash flow over the trailing twelve months, with $171 million in Q4 2025 alone. This strong cash flow supports shareholder returns and balance sheet strength.
- Attractive Forward Valuation: With a forward P/E of 12.0x, Terex trades at a discount to its trailing P/E of 15.9x, implying expected earnings growth. The P/S ratio of 0.65x and EV/EBITDA of 8.9x are reasonable for the industrials sector.
- Analyst Consensus Buy Rating: 12 analysts rate Terex a Buy with a mean rating of 2.0 (1=Strong Buy). The average target price of $79.46 implies 13.8% upside from the current $69.83, with recent upgrades from Citigroup and Morgan Stanley.
Bearish
- Margin Compression Trend: Gross margin declined from 23.8% in Q2 2024 to 18.8% in Q4 2025, while operating margin fell from 14.0% to 10.4% over the same period. This persistent margin pressure suggests rising costs or competitive pricing that could weigh on earnings.
- Sequential Revenue Deceleration: Revenue peaked at $1.487 billion in Q2 2025 and has since declined for two consecutive quarters to $1.318 billion in Q4 2025. This trend raises concerns about demand sustainability in key end markets.
- High Cyclicality and Beta: With a beta of 1.49, Terex is 49% more volatile than the market, making it highly sensitive to economic cycles. A downturn in construction or mining could significantly impact revenue and earnings.
- Elevated Debt-to-Equity Ratio: The debt-to-equity ratio of 1.34 is relatively high for an industrial company, indicating moderate financial leverage. While manageable, it could amplify earnings volatility in a downturn.
TEX Technical Analysis
Terex is in a sustained uptrend, with the stock up 34.3% over the past year, significantly outperforming the S&P 500's 16.5% gain. The current price of $69.83 sits at 93.5% of its 52-week range ($41.70-$74.69), indicating the stock is near the top of its range and reflecting strong momentum. This positioning near highs suggests bullish sentiment but also raises caution about potential overextension. Short-term momentum shows a mixed picture: the stock has declined 0.4% over the past month but gained 11.6% over the past three months. The 1-month decline contrasts with the strong 1-year uptrend, which could signal a temporary pullback or consolidation within the broader uptrend. The relative strength versus the S&P 500 is negative over 1 month (-1.17%) but strongly positive over 3 months (+8.07%), indicating that the recent weakness may be a pause rather than a reversal. Key support is at the 52-week low of $41.70, while resistance is at the 52-week high of $74.69. A breakout above $74.69 would signal a continuation of the uptrend, while a breakdown below $41.70 would suggest a bearish reversal. With a beta of 1.49, Terex is about 49% more volatile than the market, meaning larger price swings and higher risk for position sizing.
Beta
1.49
1.49x market volatility
Max Drawdown
-28.6%
Largest decline past year
52-Week Range
$42-$75
Price range past year
Annual Return
+23.6%
Cumulative gain past year
| Period | TEX Return | S&P 500 |
|---|---|---|
| 1m | -8.5% | +0.2% |
| 3m | +1.6% | +3.7% |
| 6m | +10.2% | +8.0% |
| 1y | +23.6% | +18.2% |
| ytd | +14.2% | +9.6% |
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TEX Fundamental Analysis
Terex's revenue trajectory shows moderate growth, with Q4 2025 revenue of $1.318 billion, up 6.2% year-over-year. However, the multi-quarter trend reveals deceleration: revenue grew from $1.229 billion in Q1 2025 to $1.487 billion in Q2 2025, then declined to $1.387 billion in Q3 2025 and further to $1.318 billion in Q4 2025. The Aerial Work Platforms segment ($839 million) and Utility Products ($1.3 billion) are key drivers, while Materials Processing ($279 million) and Specialty Equipment ($148 million) contribute smaller shares. The sequential decline in recent quarters raises questions about demand sustainability, though the 6.2% YoY growth in Q4 indicates continued expansion. Profitability is solid but margins are under pressure. Net income in Q4 2025 was $63 million, with a gross margin of 18.8%, down from 20.3% in Q3 2025 and 23.8% in Q2 2024. The net margin of 4.8% in Q4 2025 is below the 10.2% achieved in Q2 2024, reflecting cost headwinds. Operating margin was 10.4% in Q4 2025, down from 14.0% in Q2 2024. The compression in margins suggests rising input costs or competitive pricing, which could weigh on earnings if not reversed. Terex maintains a healthy balance sheet with a current ratio of 2.30 and debt-to-equity of 1.34. Free cash flow for the trailing twelve months is $322 million, and the company generated $171 million in FCF in Q4 2025 alone. ROE stands at 10.5%, indicating decent returns on equity. The debt level is manageable, and the company has $772 million in cash at the end of Q4 2025, providing liquidity for investments or shareholder returns.
Quarterly Revenue
$1.3B
2025-12
Revenue YoY Growth
+6.2%
YoY Comparison
Gross Margin
18.8%
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?
Since Terex has positive net income, the primary valuation metric is the P/E ratio. The trailing P/E is 15.9x, while the forward P/E is 12.0x, implying the market expects earnings growth over the next year. The gap between trailing and forward P/E suggests optimism about future profitability. Compared to the industry, Terex's P/E of 15.9x is above the sector average (data not provided, but typical for machinery around 15-20x). The P/S ratio of 0.65x is low, indicating the stock is cheap relative to sales. The EV/EBITDA of 8.9x is reasonable for the industrials sector. Historically, Terex's trailing P/E has ranged from about 6x to 30x over the past five years. The current 15.9x is near the middle of this range, suggesting the stock is fairly valued relative to its own history. The P/B ratio of 1.68x is below the 5-year average of around 2.5x, indicating potential value. Overall, the valuation appears reasonable, with forward multiples pricing in moderate growth expectations.
PE
15.9x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 6x~20x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
8.9x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: Terex's gross margin has compressed from 23.8% in Q2 2024 to 18.8% in Q4 2025, a 500 bps decline that directly impacts profitability. Operating margin fell from 14.0% to 10.4% over the same period, indicating cost pressures or pricing headwinds. The debt-to-equity ratio of 1.34 is elevated, and while interest coverage is adequate, a prolonged downturn could strain debt servicing. Revenue concentration in construction and mining end markets (70% of sales) adds vulnerability to sector-specific downturns.
Market & Competitive Risks: Terex's beta of 1.49 implies high sensitivity to macroeconomic cycles, meaning a recession could disproportionately impact the stock. The current trailing P/E of 15.9x is above the sector median, leaving limited room for multiple expansion if growth disappoints. Competitive pressures from larger players like Caterpillar and JLG could erode market share or force price concessions. Regulatory risks include environmental standards for equipment emissions, which may require costly compliance investments.
Worst-Case Scenario: A severe recession in nonresidential construction and mining could cause revenue to decline 20-30%, with margins contracting further due to operating deleverage. In such a scenario, earnings could fall to near zero, and the stock could drop to the 52-week low of $41.70, representing a 40% downside from the current price of $69.83. This aligns with the analyst low target of $66.50, which implies a 4.8% downside, but a deeper recession could push the stock lower.
FAQ
The primary risks are: 1) Margin compression – gross margin fell from 23.8% in Q2 2024 to 18.8% in Q4 2025, which could further pressure earnings. 2) Cyclicality – with a beta of 1.49, Terex is highly sensitive to economic downturns, especially in construction and mining. 3) Revenue deceleration – sequential revenue declines in Q3 and Q4 2025 raise concerns about demand sustainability. 4) Debt leverage – a debt-to-equity ratio of 1.34 amplifies financial risk in a downturn. The most severe risk is a recession causing a 40% drop to the 52-week low of $41.70.
The 12-month forecast is moderately bullish. The base case (55% probability) sees the stock trading around the analyst average target of $79.46, driven by steady demand and stable margins. The bull case (25% probability) targets $80-$100, assuming margin recovery and strong macro conditions. The bear case (20% probability) sees the stock falling to $55-$66, reflecting a recession or margin deterioration. The most likely scenario is the base case, with the stock offering a 13.8% upside from current levels.
Terex appears fairly valued relative to its own history but undervalued relative to forward earnings. The trailing P/E of 15.9x is near the middle of its 5-year range of 6x-30x, while the forward P/E of 12.0x implies expected earnings growth. The P/S ratio of 0.65x and EV/EBITDA of 8.9x are below industry averages, suggesting the market is not pricing in significant growth. The P/B ratio of 1.68x is below the 5-year average of 2.5x, indicating potential value. Overall, the valuation is reasonable and does not appear stretched.
Terex appears to be a good buy for value-oriented investors with a moderate risk tolerance. The stock trades at a forward P/E of 12.0x, a discount to its trailing P/E of 15.9x, and offers a 13.8% upside to the analyst average target of $79.46. The company generates strong free cash flow ($322 million TTM) and has a healthy balance sheet with a current ratio of 2.30. However, risks include margin compression and cyclical demand, so it is best suited for those who can tolerate near-term volatility. For long-term investors, the current valuation provides a margin of safety, but monitoring margin trends is essential.
Terex is better suited for medium to long-term investment (12-18 months or more) due to its cyclical nature and current valuation. The stock's beta of 1.49 makes it volatile for short-term trading, but its forward P/E of 12.0x and free cash flow yield of 9.2% provide a margin of safety for patient investors. The dividend yield of 1.28% offers modest income. Short-term traders may find opportunities around earnings reports, but the stock's cyclicality requires a longer horizon to realize value. A minimum holding period of 12 months is recommended to allow for margin stabilization and growth catalysts.
