Is Terex (TEX) Offering Value After Recent Pullback And Strong Multi Year Gains
- If you are wondering whether Terex shares are still offering value at current levels, you are not alone. This article will walk through what the market price might be implying about the business.
- The stock last closed at US$59.41, with returns of 8.0% year to date and 49.4% over the past year. However, a 4.3% decline over the last week and a 14.0% decline over the last month shows sentiment has recently cooled.
- These short term moves sit against a longer backdrop where Terex has also delivered 36.3% over three years and 35.0% over five years. This performance can shape how investors think about today’s price. That mix of recent pullback and longer term returns is one reason many investors are reassessing what they are willing to pay for the stock.
- On our valuation checks, Terex scores 4 out of 6 on our value score, as shown in this valuation summary. Next, we will walk through the key valuation approaches behind that score and then finish by looking at a broader way to think about what the market might be missing.
Approach 1: Terex Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a company could be worth today by projecting its future cash flows and then discounting those back to a present value.
For Terex, the model uses a 2 Stage Free Cash Flow to Equity approach, starting from last twelve months free cash flow of about $308.1 million. Analysts provide explicit estimates out to 2027, where free cash flow is projected at $654.7 million. Beyond that, Simply Wall St extrapolates cash flows out to 2035, with annual figures such as $445.7 million in 2026 and $1,608.7 million in 2035. All of these are expressed in present value terms through discounting.
When all those projected and discounted cash flows are added up, the DCF model points to an estimated intrinsic value of about $161.21 per share. Compared with the recent share price of $59.41, this implies the stock is around 63.1% undervalued based on these assumptions and inputs.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Terex is undervalued by 63.1%. Track this in your watchlist or portfolio, or discover 48 more high quality undervalued stocks.
Approach 2: Terex Price vs Earnings
For a profitable company, the P/E ratio is a familiar and intuitive yardstick because it tells you how many dollars the market is paying for each dollar of current earnings. Investors usually expect higher P/E ratios where they see stronger growth potential or lower perceived risk, and lower P/E ratios where growth looks more modest or risks are higher.
Terex currently trades on a P/E of 30.6x. That sits above the Machinery industry average P/E of 26.0x and the peer group average of 19.4x, which suggests the market is assigning a higher earnings multiple to Terex than to many of its listed peers.
Simply Wall St also estimates a proprietary Fair Ratio of 36.3x for Terex. This Fair Ratio is intended to reflect the P/E that might be reasonable for the company given factors such as its earnings growth profile, industry, profit margins, market capitalization and risk characteristics. Because it blends these company specific drivers, it can be more tailored than a simple comparison with industry or peer averages.
On this basis, Terex’s current P/E of 30.6x sits below the Fair Ratio of 36.3x, suggesting the shares may be undervalued against this framework.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your Terex Narrative
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. With Narratives you set a simple story for Terex, link that story to your own assumptions for future revenue, earnings and margins, and see how that flows through to a Fair Value you can compare with today’s price.
On Simply Wall St’s Community page, Narratives are an easy tool used by millions of investors to turn a view like “Terex fully captures REV Group synergies, grows revenue by around 8.8% a year and earns about $520.8 million by 2028” or “industry changes and tougher competition keep it closer to 5.1% revenue growth and $509.9 million of earnings” into a live forecast and Fair Value that sits alongside the current price.
Because each Terex Narrative is updated automatically when new earnings, news or guidance arrive, you can see in real time whether your Fair Value estimate still supports holding, waiting, or reducing exposure. You can also compare more optimistic views that assume a Fair Value near the bullish US$73.0 with more cautious ones closer to US$38.0 to decide which story best fits your own expectations.
For Terex, here are previews of two leading Terex narratives:
Fair value in this bullish narrative: US$78.77 per share
Implied discount to this fair value at the last close: about 24.6% undervalued based on this story
Revenue growth assumption: 18.02% a year
- Analysts in this camp see Terex benefiting from multi year infrastructure, manufacturing and urbanization spending, with support from policy incentives and large projects.
- Electrification, digital solutions and expected US$75m of REV Group synergies are included as drivers of higher margins, stronger cash generation and a more diversified business mix.
- This view also factors in risks such as interest rates, tariffs, competition and demand swings, but concludes that the current price still leaves room if the growth and margin targets are met.
Fair value in this bearish narrative: US$38.00 per share
Implied premium to this fair value at the last close: about 56.3% overvalued based on this story
Revenue growth assumption: 5.07% a year
- The bearish view focuses on challenges from automation, environmental rules and changing customer preferences that could weigh on demand for Terex’s traditional equipment over time.
- It also highlights pressures from tariffs, supply chain issues, larger competitors and possible price wars that could squeeze margins and limit earnings stability.
- Supportive drivers such as resilient end markets, Environmental Solutions growth and potential merger synergies are acknowledged as factors that could prove this cautious stance too pessimistic.
If you want to go beyond these previews and see how other investors are framing the upside and downside, Curious how numbers become stories that shape markets? Explore Community Narratives and compare the full bull and bear stories with your own assumptions.
Do you think there's more to the story for Terex? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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