Since January 2025, Terex has been in a holding pattern, posting a small return of 2.7% while floating around $50.24.
Is there a buying opportunity in Terex, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Is Terex Not Exciting?
We don't have much confidence in Terex. Here are three reasons why we avoid TEX and a stock we'd rather own.
1. Slow Organic Growth Suggests Waning Demand In Core Business
Investors interested in Construction Machinery companies should track organic revenue in addition to reported revenue. This metric gives visibility into Terex’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.
Over the last two years, Terex’s organic revenue averaged 2.4% year-on-year growth. This performance was underwhelming and suggests it may need to improve its products, pricing, or go-to-market strategy, which can add an extra layer of complexity to its operations. 
2. EPS Took a Dip Over the Last Two Years
Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.
Sadly for Terex, its EPS declined by 16.4% annually over the last two years while its revenue grew by 4.4%. This tells us the company became less profitable on a per-share basis as it expanded.
3. Free Cash Flow Margin Dropping
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
As you can see below, Terex’s margin dropped by 6.1 percentage points over the last five years. This along with its unexciting margin put the company in a tough spot, and shareholders are likely hoping it can reverse course. If the trend continues, it could signal it’s becoming a more capital-intensive business. Terex’s free cash flow margin for the trailing 12 months was 4%.
Final Judgment
Terex isn’t a terrible business, but it isn’t one of our picks. That said, the stock currently trades at 10.3× forward P/E (or $50.24 per share). This valuation multiple is fair, but we don’t have much faith in the company. We're fairly confident there are better stocks to buy right now. Let us point you toward one of our all-time favorite software stocks.
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