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On Thursday, Baird updated its outlook on Terex Corporation (NYSE:TEX), a global manufacturer of lifting and material processing products, by increasing its price target from $63.00 to $65.00. The firm maintained a Neutral rating on the stock. This adjustment comes in the wake of Terex's recent completion of its acquisition of Environmental Solutions Group (ESG), a deal that was initially announced on July 22, 2024, for a total of $2.0 billion.
Terex officially closed the acquisition of ESG on Wednesday. ESG, which specializes in environmental and waste handling solutions, reported last twelve months (LTM) sales of $835 million and earnings before interest, taxes, depreciation, and amortization (EBITDA) of $174 million for the second quarter of 2024. Baird's updated model includes the financial impact of this acquisition, projecting accretion excluding deal-related amortization of $0.15 per share for the remainder of 2024.
Looking ahead, Baird's analysis suggests further benefits from the ESG acquisition, with an expected accretion of $0.60 per share in 2025 and $0.80 per share for 2026. These projections have led to adjustments in the firm's estimates for Terex's future financial performance.
The analyst also noted that ESG will be treated as a separate, third segment of Terex's business operations for the time being. A planned re-segmentation of the company is anticipated, which will provide more refined estimates and segment details in future updates. The acquisition marks a significant expansion for Terex and adds a new dimension to the company's portfolio in the environmental solutions market.
In other recent news, Terex Corporation has announced the pricing of $750 million in senior notes to finance its acquisition of Dover Corporation (NYSE:DOV)'s Environmental Solutions Group. The corporation is also amending its existing credit agreement, increasing its revolving credit facilities from $600 million to $800 million. This move is backed by major financial institutions including UBS, Bank of America, Barclays, and JPMorgan Chase (NYSE:JPM).
In the earnings domain, Terex reported Q2 revenues of $1.4 billion and adjusted earnings per share at $2.16. The company has revised its 2024 earnings outlook, now expecting adjusted earnings per share to fall between $5.80 and $6.20, with projected revenues of $4.85 to $5.05 billion.
Terex has cleared a regulatory hurdle in its acquisition of Environmental Solutions Group, with the deal expected to close later this year.
InvestingPro Insights
To complement Baird's updated outlook on Terex Corporation (NYSE:TEX), InvestingPro data offers additional insights into the company's financial health and market position. Terex's current market capitalization stands at $3.58 billion, with a price-to-earnings (P/E) ratio of 7.23, indicating that the stock may be undervalued relative to its earnings. This is further supported by an InvestingPro Tip suggesting that Terex is "Trading at a low earnings multiple."
The company's revenue for the last twelve months as of Q2 2024 was $5.19 billion, with a modest growth of 4.22%. Despite the recent acquisition, Terex has maintained a strong financial position, as evidenced by another InvestingPro Tip stating that "Liquid assets exceed short term obligations." This financial stability could be crucial as the company integrates ESG into its operations.
Investors may also be interested to know that Terex "Has raised its dividend for 3 consecutive years," according to an InvestingPro Tip. With a current dividend yield of 1.27% and a dividend growth rate of 13.33% over the last twelve months, Terex demonstrates a commitment to shareholder returns alongside its growth strategy.
For those seeking a more comprehensive analysis, InvestingPro offers 11 additional tips on Terex, providing a deeper understanding of the company's financial health and market position.
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