Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Terex Corporation (NYSE:TEX), maker of industrial handling and construction equipment, is seeing its stock get knocked down today, as much as 10% at one point and about 5% as of this writing. Over the past year, its stock is down more than 35%.
So what: Terex reported a surprise $2.1 million loss when it released its first-quarter earnings report, compared to a $32.6 million profit in the year-ago period. Wall Street was expecting a $16 million profit in the quarter.
Now what: After a surprise beat in February, that sent the stock up 10%, Terex comes up short this quarter and the stock tanks. The reality is, this is the risk of short-term trading and thinking. After all, the analysts that are paid to cover the company have got it wrong the past two quarters, underestimating last time, overestimating this time. Okay, so that's an oversimplication, since there are a lot of factors at play here, including things like foreign currency exchange, which Terex said cost the company about 10% in U.S. dollars in revenue, but the point is, don't get too caught up in the quarter-to-quarter movement of the stock.
Looking at the bigger picture, Terex continues to face a number of challenges. The global economy is far from fully recovered from the recession, and this is going to continue squeezing the company until demand for its machines rebounds. Management did reiterate its full-year guidance for both earnings and revenue, but it remains a tough market for pretty much every company making big, expensive industrial machines.
Eventually demand will pick up, but frankly there aren't a lot of clear signs that it's going to happen soon.