Shares of leading specialty equipment and vehicle manufacturer Terex (NYSE: TEX) are up 13% as of 11 a.m. ET on Wednesday after the company delivered fourth-quarter earnings this morning. Sales grew 8%, meeting Wall Street’s expectations, while adjusted earnings per share snuck past analysts’ consensus. However, the figure that stole the show was Terex’s 32% booking growth in Q4. Powered by this booming backlog, management guided adjusted EBITDA to grow by 12% to $965 million in 2026, leaving the stock trading at a discounted EV/EBITDA ratio of just 6.
This business momentum paints a pretty bright future for Terex, especially as the integrates its recent Environmental Solutions Group (ESG) acquisition and wraps up its REV Group purchase. The $2 billion ESG deal added garbage collection vehicles, waste compaction equipment, and aftermarket parts, helping to reduce Terex’s overall business cyclicality. Meanwhile, the stock-and-cash merger with REV Group further reduces Terex’s cyclicality by adding ambulances, fire trucks, and similar specialty vehicles and equipment. Following these deals, Terex will generate roughly 70% of its sales from its emergency vehicles, waste and recycling, and utilities segments, which operate in industries with government-backed or non-discretionary spending.
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Once the company successfully spins off or sells its highly cyclical aerials and cranes business line, as management hopes, Terex will generate the vast majority of its revenue from vehicles serving non-discretionary industries. This steady-Eddie nature would pair perfectly with the company’s history of growing its dividend and reducing its share count. Over the last decade, Terex’s dividend has grown from $0.24 to $0.68, while the company’s shares outstanding dropped by 40%. Trading at just 14 times its 2026 earnings guidance, the new-look Terex isn’t outrageously priced. I’ll keep the company on my radar and think it could become an interesting stock once it divests from its cyclical aerial business.
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