Terex Corporation (TEX): what the price assumes

In the published model solve dated 2026-Q2, anchored at $66.08, Terex Corporation (TEX) is priced for today's economics sustained for ~8.3 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-11.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/TEX

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 11.3% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.8 years.

Reconcile: at the x-ray's 9.3% required return this reads ~23.6%/yr; the models below use their own rates.

How unusual the bet is: elevated

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.2%); the inversion above states its own rate.

Per-Model Detail (n=18)

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Terex is reshaping itself from a pure construction-machinery maker (Genie aerial platforms, materials processing) into a more diversified industrial by adding Environmental Solutions, a waste and recycling equipment business that grew 3.3% to $412 million in Q1 2026.
• The headline Q1 GAAP loss of $0.97 per share is a merger-accounting artifact; adjusted EPS was $0.98 and full-year 2026 adjusted EPS guidance is $4.50 to $5.00.
• The biggest risk is the cycle meeting the leverage: interest is covered only about 1.8 times, and the core aerial and construction businesses swing hard with construction demand and dealer inventories.

Bull Case

The counterintuitive thing about Terex is that a company posting a GAAP loss is actually earning close to $5 a share, and is deliberately buying its way out of its own cyclicality. The Q1 2026 GAAP diluted loss of $0.97 per share looks alarming until you see it came from merger-related amortization and non-cash charges; adjusted EPS was $0.98, up 18%, and management reaffirmed full-year 2026 guidance of $4.50 to $5.00. The reported bottom line is being suppressed by the accounting for a transformative acquisition, not by the operating business falling apart.

That acquisition is the strategic point. Terex added Environmental Solutions, and the FY2025 10-K describes the widened portfolio spanning "crushers, washing systems, screens, trommels, apron feeders, material handlers ... concrete mixer trucks and concrete pavers, conveyors" alongside products "that aid in the recovery of useful materials from various types of waste." Refuse and recycling equipment is far more stable than aerial work platforms: waste gets collected in every part of the cycle, so the environmental business dampens the swings that have historically defined Terex. Environmental Solutions grew 3.3% to $412 million in Q1 2026 at an 18% adjusted EBITDA margin, a higher-margin, steadier revenue stream than the legacy machinery.

The cash generation supports the transition. Free cash flow converts well above net income (trailing conversion is inflated by the depressed GAAP denominator, but the underlying cash flow is real), the company raised its dividend, and revenue grew 41% year over year in the March quarter as the acquisition scaled the top line to $1.73 billion. Management guided each ongoing segment (Environmental Solutions, Materials Processing, Specialty Vehicles) to mid-to-high-single-digit growth with margin improvement in 2026. The bull case is a cyclical machinery maker using a well-timed acquisition to build a more durable earnings base, while the market anchors on a GAAP loss that misrepresents what the business actually earns.

Bear Case

Terex's legacy engine is deeply cyclical, and the current numbers are being earned at a point where that cycle is already showing strain. Aerial work platforms and construction equipment sell on the same forces that turn fastest in a downturn: capital-spending appetite, dealer inventory levels, and equipment residual values. The FY2025 10-K is explicit about the mechanism, warning that in weak conditions dealers "may be compelled to sell their equipment at less than fair value to raise cash, which could have a negative impact on residual values of our equipment," and that deterioration in dealer or customer credit quality feeds directly into demand. This is a business where a slowdown does not arrive gently; it arrives through the channel all at once.

The Q1 2026 quarter already showed margin pressure the bulls attribute entirely to accounting. Gross margin fell to 11.88% from the high-teens to low-20s of prior quarters, and management acknowledged that "tariffs constrained Aerials margins" alongside the merger charges. Tariffs are an external cost the company cannot control, and Aerials is its most cyclical, most competitive segment. Even the acquired Environmental Solutions business saw its adjusted EBITDA margin compress to 18.0% from 20.3% on unfavorable product mix, so the steadier business is not immune either.

The leverage turns the cyclicality into genuine risk. Interest is covered only about 1.8 times by operating income, the Altman score of 1.73 sits in distress territory, and the debt was taken on to fund the Environmental Solutions acquisition. A company this levered has little room if construction demand softens: the fixed interest bill does not shrink when revenue does. The valuation gives no cushion for any of this. Only the growth-oriented method reaches today's price; the asset, earnings-power, and peer-multiple lenses all read the stock as richly valued, the asset lens at nearly eight times what it supports. The market is paying about 38x company-wide operating income and implicitly assuming near-peak growth held for a dozen years, a persistence only about 14% of comparable fast-growers achieved, in one of the more reliably cyclical corners of industrials.

Valuation

Start with why the headline multiple is not the real one. At $67.50 (July 11, 2026), Terex shows a GAAP P/E near 58, but the trailing GAAP earnings are depressed by merger-related amortization and charges from the Environmental Solutions acquisition; the company's adjusted EPS run rate points to $4.50 to $5.00 for 2026, which puts the real earnings multiple in the mid-teens. The GAAP loss in Q1 is an accounting event, not an operating collapse, and any valuation anchored on the reported net income of $0.11 billion is anchored on a distorted figure.

The methods still read the price as demanding once you look past the GAAP noise. Only the growth-oriented method reaches the price; the asset-based, earnings-power, and peer-multiple lenses all say richly valued, the asset lens at nearly eight times. Inverting the price, the market is paying about 38x company-wide operating income and, in effect, assuming growth held near the self-funding ceiling for roughly 12 years. The margin requirement is undemanding, the business only has to hold roughly the 5.5% operating margin it earns today, so the bet is on duration, not margin expansion. But 12 years of sustained growth is a heavy assumption for a company whose core is cyclical construction machinery, and only about 14% of comparable fast-growers held that pace for even a decade.

Solvency is the concern the equity price is not dwelling on. Leverage is meaningful: operating income covers interest only about 1.8 times, and the Altman score of 1.73 reflects the debt taken on for the acquisition. In a construction downturn, that fixed interest bill collides with falling revenue exactly when the aerial and materials businesses are weakest. The Environmental Solutions addition is designed to steady the cash flows that service the debt, which is the strategic logic, but it has not yet been proven through a full cycle. The price is not stretched against a single method so much as it is stretched against the combination of cyclicality and leverage: the bet is that the diversification dampens the cycle before the cycle tests the balance sheet.

Catalysts

Q1 2026 was a headline loss that masked an operational beat. Net sales of $1,734 million came in above expectations and rose 41% year over year as the Environmental Solutions acquisition scaled the top line, but GAAP diluted EPS from continuing operations was negative $0.97 due to heavier amortization and merger-related charges, with GAAP EBITDA a $7 million loss on those non-cash items. Adjusted EPS was $0.98, up 18%, including about $0.10 from one-time tax benefits. Tariffs constrained Aerials margins, and Environmental Solutions grew 3.3% to $412 million with adjusted EBITDA margin easing to 18.0% from 20.3% on product mix.

Guidance frames 2026 as a margin-improvement year with heavy back-half phasing. Management reaffirmed full-year adjusted EPS of $4.50 to $5.00, with only about 25% of EPS expected in Q2 due to profitability phasing, and guided Environmental Solutions to mid-single-digit growth, Materials Processing and Specialty Vehicles to high-single-digit growth, all with anticipated margin gains. The items to watch are whether the promised margin improvement materializes as the year progresses, the effect of tariffs on the Aerials segment, dealer inventory and construction demand trends that drive the cyclical core, and the integration and margin trajectory of Environmental Solutions. The Q2 2026 report is the next checkpoint on the profitability phasing management has guided.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• CAT (CATERPILLAR INC)
• FY2025 10-K: …information about our operations in 2025, including certain risks associated with our operations, is included in Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations." Construction Industries Our Construction Industries segment is primarily responsible for supporting…
• FY2025 10-K: …in mining, heavy construction and quarry and aggregates. Caterpillar offers a broad product range and services to deliver comprehensive solutions for our customers. We develop and manufacture high productivity equipment for both surface and underground mining operations around the world, as well as provide select…
• DE (DEERE & CO)
• FY2025 10-K: …factors in all markets include product performance, technology features, innovation, quality, distribution, sustainability, financing, customer service, and value. John Deere's brand recognition is a competitive factor in North America and many other parts of the world. The agricultural equipment industry continues…
• FY2025 10-K: ​ Sales volume and other ​ ​ ​ ​ ​ ​ ​ -8 ​ Price realization ​ ​ ​ ​ ​ ​ ​ +1 ​ Currency translation ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating profit ​ ​ 1,207 ​ ​ 1,627 ​ -26 ​ Operating margin ​ ​ 11.8% ​ ​ 14.8% ​ ​ ​ ​ Sales volumes decreased 17% in the U.S. and Canada, partially offset by an increase of 26% in India and 5% in…
• CNH (CNH INDUSTRIAL N.V.)
• FY2025 10-K: …of attachments for specialized applications, such as skid steer loaders, compact track loaders and mini-crawler excavators. Industrial Activities Competition The agriculture and construction equipment industries are highly competitive at both global and regional levels. We compete with: (i) large global full-line…
• FY2025 10-K: …competitive pricing, particularly in emerging markets and during downturns. Compliance with evolving engine emissions standards is a critical competitive factor, particularly in regions subject to frequent regulatory change such as Europe and North America. New legislation in India and China has also further…
• ASTE (Astec Industries, Inc.)
• FY2025 10-K: …Through academic partnerships and applied research, we accelerate product development while reducing prototype costs and advancing sustainability initiatives across our product portfolio. Seasonality and Backlog Revenues have historically been strongest during the first, second and fourth quarters with the third…
• FY2025 10-K: …and residential paving contractors and governmental agencies, both domestically and internationally. Wood chippers, horizontal grinders and blower trucks are primarily sold to clearing, right of way, forestry and environmental recycling contractors. Competition This industry segment is highly competitive and…
• ALG (ALAMO GROUP INC.)
• FY2025 10-K: …strong sales growth in the Industrial Equipment Division. Net income was impacted by the CEO transition costs, acquisition and integration expenses, and ongoing restructuring efforts. Additional pressure on net income resulted from market-driven revenue declines and production inefficiencies in the Vegetation…
• FY2025 10-K: …competitive markets throughout the world. The principal competitive factors are price, quality, availability, service and reputation. The Company competes with several large national and international companies that offer a broad range of equipment and replacement parts, as well as with numerous small, privately-held…
• AGCO (AGCO CORP /DE)
• FY2025 10-K: …in the joint venture. Results of Operations - Segment Information The Company has four operating segments which are also its reportable segments which consist of the Europe/Middle East ("EME"), North America, South America and Asia/Pacific/Africa ("APA") regions. The Company's reportable segments are geography based…
• FY2025 10-K: …production and sales volumes, factory productivity, pricing impacts, material costs, benefits from cost reduction initiatives, investments in, and results of, product development and enhancement, compliance with financial covenants, support from lenders, recovery of amounts under guarantee, uncertain income tax…
• ACA (Arcosa, Inc.)
• FY2025 10-K: …operating decision maker, the Chief Executive Officer, to make decisions about resources to be allocated and assess performance. The Company reports operating results in three principal business segments: Construction Products. The Construction Products segment primarily produces and sells natural and recycled…
• FY2025 10-K: …expenses depending on whether the underlying assets contribute to the production of revenue. 2025 versus 2024 • Revenues decreased 8.2% resulting from the sale of the steel components business in the prior period. Revenues for inland barges increased 16.2%, driven by higher tank barge deliveries, partially offset by…
• CTOS (Custom Truck One Source, Inc.)
• FY2025 10-K: …advantage in serving customers with nationwide operations who may prefer the convenience of interacting with a limited number of equipment providers. Although we have an expansive national footprint already, we have identified additional attractive geographic markets for potential expansion. Strong, Diverse Client…
• FY2025 10-K: …of $ 2.4 million for the 2015 periods, alleging that certain types of sold equipment are not eligible for the Mobile Machinery Exemption set forth in the Internal Revenue Code (the 67 "Code"). An appeal was filed on January 28, 2021. Based on management's understanding of the facts and circumstances, including the…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.