Out Fox The $treet

Small-Cap Insight A year after originally writing about the key margin improvements expected at Terex Corporation ( TEX ) , the amounts are still a future expectation. In fact, back in 2009 the company originally presented the expectations that operating margins would increase to 12% by 2013. The number though still languishes around 6% on a yearly basis. The company remains a leader in the manufacturer of machinery and industrial equipment focused on aerial work platforms ( AWP ), construction, cranes, material handling and port solutions (MHPS), and materials processing segments. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

In the Q4 earnings release, Terex (NYSE: TEX ) announced the goals of earning $5 in 2015. Considering the company just reported a year of achieving $1.83, the natural question is whether the company can legitimately grow earnings that fast over the next 3 years. The company is a diversified global manufacturer of equipment focused on aerial work platforms, construction, cranes, material handling and port solutions, and materials processing. With more » Disclosure: Long TEX. Please review the disclaimer page for more details. 

Absurd that this country can't pass a long-term transportation bill. Dysfunctional to say the least in Congress. Even with these issues, Terex (TEX) is hiring 500 employees in Washington for Aerial Work Platforms though it is unfortunately only to replace aging equipment as much as new equipment. Globally though Terex continues to hire as infrastructure is a lot higher priority for those countries. See below interview CEO Ron DeFeo on Bloomberg: Disclosure: Long TEX. Please review the disclaimer page for more details. 

As the largest shareholder of Bucyrus (BUCY), Terex (TEX) is a big beneficiary of the buyout of BUCY by Caterpillar (CAT).  TEX owns 5.8M shares now worth over $500M. Not only do they get the appreciation from the 30% gain today, but more importantly TEX gets to cash out their shares that they acquired via the sale of their mining division to BUCY at a premium. Having the $500M in cash on hand is a lot more valuable to them then stock in BUCY. TEX provides one of the best stock picks for the global rebound. At $25, TEX provides one of the few remaining stocks that hasn't rebounded. The stock still remains roughly 75% below 2008 highs while some stocks have already eclipsed those highs ala BUCY. The crane industry is still struggling to recover from the financial crisis, but signs are emerging that 2011 will the recovery year and TEX likely plays catchup with the market. TEX now enters the recovery phase of its business cycle with a rock solid balance sheet. After the close of t...

After the bell on the 20th, Terex (TEX) reported earnings that showed an improvement in all divisions except for Cranes. Unfortunately for TEX, Cranes is the largest and most important division though it's impact has been significantly reduced this year as sales bounce back in Aeriel Work Platforms (AWP), Materials Processing (MP), and Construction . The results were a slight disappointment mainly due to unexpected order cancellations and pushouts in Europe. Based on the results from Manitowoc (MTW) reported earlier this month, it wasn't too surprising that Crane sales were weak. TEX saw a nice improvement in backlog even including a 2% sequential increase in Cranes. All in all with rental companies such as United Rentals (URI) reporting high utilization rates and the ABI turning positive it appears that the weak division in the TEX portfolio will finally turn around in 2011. Another positive sign is that TEX is finally moving aggressively into developing markets. They are ...

The Architecture Billings Index (ABI) has been one of the weakest indexes to recover from the recession. The index measures the work of architects on non-residential construction projects and usually signals work in the next 9 to 12 months. The September Architecture Billings Index was up 2.2 points to 50.4, marking the fourth consecutive month of increases, the American Institute of Architects said. Finally suggesting a recovery in the very weak construction area. Also encouraging was that the project inquiries index hit 62.3, the highest level since 2007.  Apparently the US finally sees a recovery in construction activity early next year. This will help companies like Terex (TEX), Manitowoc (MTW), and Ingersoll-Rand (IR) which haven't benefited as much from the gains in industrial spending.  From Reuters : "The strong upturn in design activity in the commercial and industrial sector certainly suggests that this upturn can possibly be sustained," said Kermit Ba...

Terex (TEX) got a $40 target from Buckingham Research today suggesting as much as a 65% gain from these levels. TEX is a leading construction equipment company specializing in AWPs and Cranes. TEX will benefit from the recovery from the global recession and the return to infrastructure building around the world. Can't find any specifics on the upgrade other the headline details of the $40 target. The target while aggressive should be in line with expectations considering that management has a viable plan for $6 in earnings in the next few years and global growth should oblige. The next potential catalyst will be earnings on Wednesday after the close. Analysts expect a $.16 loss and based on recent history and the crane number out of competitor Manitowoc (MTW) numbers should be relatively in line depending on cost cutting efforts. As the economy continues to turn though, margins will quickly become more favorable and additional revenue will flow to the bottom line. Load up on TE...

Joy Global (JOYG) is a leading builder of mining equipment especially needed for the mining of coal. Unfortunately its not owned by the Stone Fox Capital portfolios, but they do provide a great insight into the world commodity markets. JOYG reported a strong quarter and more importantly talked about 'some slowing' in global commodity demand, but reiterated that demand remains at historical highs. The key take away is that prices for met coal, iron ore, and copper remain at elevated levels and mining capacity is above 90%. Therefore, the active prospect list is growing very fast. In essence, JOYG speaks of a marker that has taken a pause before it journeys higher. Little did they know that the ISM Manufacturing report released a couple of hours later would unleash a big rally in the markets. New orders were up 51% over last year. Backlog increased to $1.8B from $1.5B on October 30, 2009. More importantly guidance was raised to between $4.1 and $4.15 up from an analyst estim...

Not something we'd usually comment on, but the option volume sure suggests something is in the works. TEX closed at $28.18 which is close to a 52 week high. The spectacular number today is the 15K options traded for May with a large volume in the 30s. This does give some credance to the rumors of management taking them private via a LBO. TEX has been rumored of a buyout for a while now. They've cleaned up their business via some divestures that has really solidified the balance sheet. The stock trades nearly 70% below its 2007 high and management expects earnings of $6 in 2013. Means making $7-8/share is the likely internal goal. Why wouldn't you want to take it private if the market will let you? Not a huge fan of buyouts, but I'm not one to turn down free money today instead of waiting 12 months for it either. Not being an insider we aren't privy to all the news nor can we affect the outcomes. If TEX wants to offer shareholders $40 this week, I'd gladly take ...

You won't hear that in the media reports tomorrow. It'll all be about a larger loss then expected (more on that later) or blah blah this and that. In reality, Terex (TEX) continues to work through a deep and devastating recession in the heavy equipment market. One that has completely crushed end markets as revenues were down some 50% from the 2008 levels of $8.5B. At the end of the press release though, TEX provided a nice little nugget regarding revenue. Revenue is expected to grow 25% next year to hit $5B partially because of adding the port equipment but a lot because of a return to growth. As far as 'missing' the estimates I mentioned earlier, we've already got a Reuters report talking about how they missed estimates. Reuters is quoting the same numbers on Yahoo! Finance that clearly haven't been updated for the sale of the mining division. The revenue for 2009 is in line with the estimates given after the sale of the mining division and actually tops the ...

Terex is one of the largest builders of Construction and Mining equipment in the world. Late Sunday night they announced a deal to sell their mining equipment business to Bucyrus (BUCY). According to management, this deal for $1.3B in cash (or potentially $300M in BUCY stock) allows for TEX to focus on the Crane, Aerial Work Platform, Construction, and Materials Processing sectors. It also provides TEX with much needed liquidity in this liquidity strained market. The deal transfers about 20% in sales or roughly $1B from 2009 totals, but only 15% of sales back in the boom times of 2008. The mining segment was also requiring over 20% of working capital expenditures even though in normal times it doesn't produce more then 15% of revenues. On the Conference Call this morning to discuss the deal, the CEO announced that TEX has a goal to double revenues to roughly the $8B level and EPS to $6 by 2013. Impressive numbers for a $20 stock with a $2.2B market cap if they can achieve those n...

The Wall St Journal is reporting that the proposal to allow Tax Loss Carry Backs for 5 years is poised to be approved next week. It's been difficult to find information on this subject as we originally wrote about it on Wednesday [Tax Loss Proposal Gains Support] and hadn't seen any news about it until finding this article. The proposal is significant because it will provide immediate capital to a lot of struggling small cap stocks such as Liz Claiborne (LIZ) mentioned in the article. Basically any company losing money now would immediately be able to receive a portion of the taxes back that they've paid the last 5 years. The more they've lost the better. The article doesn't mention financials so we're still wondering what the impact will be on companies such as Regions Financial (RF) or Synovus Financial (SNV) that both received TARP money. If those companies were to get a refund, Congress might come under fire. If excluded, LIZ or Terex (TEX) would be our fa...

Hartford Financial ( HIG ) is now the top position in our Growth portfolio and Terex ( TEX ) is a long term holding. Both companies closed today at highs not seen since the market blewup late last year. Being that they both broke thru closing highers from the last couple of weeks, they are likely to surge even higher. HIG : with 2010 estimates now approaching $4, HIG is likely to surpass a 10 PE sooner rather then later. I'd place at least a $50 target on this stock as the SP500 stays above the 1,000 level. So the closing price above $28.5 is still only a 7 PE. TEX : this construction company is more difficult to value with some analysts placing the trough sales not until 2011. TEX once traded close to $100 so it seems unlikely that a price just jumping above $20 would be anywhere near a top. The way China and India have returned to growth and the demand for housing in Brazil is seems overly pessimistic that demand won't pick up much sooner then expected. MTW has also broken ou...