Someone seems to be holding down the fast-forward button as Terex's
After persistently pleading with investors to avoid this recession-battered stock, I reversed my stance last October, while highlighting a growing fortress of strength visible in Terex's operations. The shares certainly haven't disappointed, surging nearly 60% since that article appeared. That's an enormous move over a very short time, and just enough for this ever-cautious Fool to grow somewhat skeptical about the prospects for its sustained upward momentum.
Terex did substantially narrow its fourth-quarter net loss, to $32.5 million from $103 million in 2009, and net sales from continuing operations improved a respectable 31.2% to $1.3 billion. However, this loss came in 200% greater than analysts anticipated, suggesting that these shares may have moved too far, too fast.
Terex expects to lose $0.10 to $0.15 per share in the first quarter of 2010, before transitioning to operating profitability. But even the company's latest guidance, for full-year 2011 earnings of $0.60 to $0.75 per share, falls short of the consensus estimate of $0.77. The fact that shares remain within spitting distance of their 52-week high, following this string of disappointments, seems to increase the chances that Fools looking to participate in the company's long-term recovery may encounter more favorable entry points forthcoming.
One could argue that Terex caught a major break when Caterpillar
Without question, Terex has seen some noteworthy improvements to business conditions for each of its remaining units. As the company boasts, "all of our segments increased net sales this past quarter on both a yearly and sequential basis, and three of our four segments had positive income from operations." Even the construction segment, which weighed so heavily upon operating results throughout recent years, has moved substantially closer to profitability lately (with orders flowing in from Brazil and Central Europe).
Following a remarkable 80% run-up over the trailing 12 months, I consider Terex shares patently overheated. I ascribe superior long-term growth potential to former competitor Joy Global