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Terex Corp. (TEX) is seeing strong demand in North America and strength across its Aerial Work Platforms (AWP) and Cranes divisions. The heavy equipment maker has produced an average earnings surprise of around 30% over the last four quarters and has seen its stock price rocket roughly 58% year-to-date. It has put together four straight quarters with positive earnings surprises, and is scheduled to report third quarter results in less than two weeks.

With strong order backlog, healthy demand for rough terrain cranes and a robust earnings growth projection for the year, this Zacks #1 Rank (Strong Buy) stock deserves the attention of aggressive growth investors.

Q2 Sees Big Beat; Q3 Coming Up

On July 25, Terex reported a positive earnings surprise of 53.06% for the second-quarter, as adjusted earnings of 75 cents per share comfortably beat the Zacks Consensus Estimate of 49 cents. This marked its fourth straight positive surprise.

Revenues spiked 35% year over year to $2,011.5 million. Gross margins expanded to 21.3% from 14.4% a year ago. The company’s backlog for orders jumped 18% year over year to $2,076 million. The healthy results sent shares higher by as much as 31%.

Sales from the core AWP segment soared roughly 25% to $605.7 million, boosted by higher demand in the North American rental channel. The Construction segment reported a roughly 8% growth in sales to $388.8 million. The division returned to profitability for the first time since 2008, driven by strong demand in the emerging markets of Russia, China and Latin America.

Revenues from the Cranes division rose around 4% to $484.2 million, helped by strong demand for rough terrain cranes and all terrain cranes in North America, the Middle East, Latin America and Australia.

The company beefed up its earnings forecast to between $1.95 and $2.05 per share from the previous guidance of $1.65 to $1.85. However, it narrowed the net sales target to between $7.5 billion and $7.8 billion from the earlier view of $7.5 billion to $8 billion. Terex sees strength in the North American market, and expects its AWP and Cranes units to position it for a continued improved performance in the second half of 2012.

Terex is expected to report its third quarter results on October 22. The Zacks Consensus Estimate is currently at 49 cents per share.

Earnings Momentum Gains for 2012

The Zacks Consensus Estimate for 2012 has moved higher by 10% over the last 90 days to $1.95 per share, suggesting an annualized growth of roughly 325%.

Attractive Valuation

Terex is currently trading at a forward P/E of 11.69x, on par with the peer group average. The price-to-book of 1.25x is lower than the peer group average of 1.57x. The company also sports a price-to-sales (P/S) ratio of just 0.3, below the peer group average of 0.7.

A Peek at the Chart

The price and consensus chart shows that earnings estimates are hovering above the stock price, indicating that Terex is undervalued. The strong earnings growth potential has been portrayed by the gap between the estimate lines for each year from 2011 to 2014, something which should catch growth investors’ attention.

Founded in 1925, Terex Corporation is a global equipment maker serving the construction, infrastructure and surface mining industries. Its products include construction equipment, cranes, aerial work platform equipment and mining equipment. The company also offers a comprehensive range of financial products and services. Its manufacturing facilities are located in the U.S., Canada, Europe, Australia, Asia and South America. Terex, which has a market cap of roughly $2.5 billion, operates through four segments and markets its products through a global distribution network.

Source: Terex: Aggressive Growth Investors Should Pay Attention