• For investors considering whether Terex at around US$61 still offers value or if most of the upside is already reflected in the price, this article walks through what the current valuation suggests for you as a shareholder or potential investor.
• The stock has recorded returns of 4.1% over 7 days, 2.6% over 30 days, 11.0% year to date, and 79.6% over 1 year. This naturally raises questions about how much of the story is now priced in and how risk is being perceived.
• Recent news coverage around Terex has focused on its role within capital goods and machinery, giving investors more context on how its business is positioned relative to peers and sector trends. These updates help frame whether the recent share price moves are being driven more by company specific developments or by broader industry sentiment.
• On Simply Wall St's valuation model, Terex has a value score of 4/6, which reflects how many of six checks currently suggest the stock is undervalued. The next sections will break this down across different valuation methods, while also pointing to an even more complete way to think about value at the end of the article.

Approach 1: Terex Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company might be worth by projecting its future cash flows and then discounting those back to today’s value. It aims to answer what those future dollars are worth in today’s terms.

For Terex, the model uses a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest trailing twelve month free cash flow is about $308.1 million. Analyst input is available through 2027, with free cash flow for that year modeled at $654.7 million. Beyond that, Simply Wall St extrapolates cash flows through 2035, with each year’s figure discounted back to today using the DCF framework.

Adding these discounted cash flows together gives an estimated intrinsic value of about $158.18 per share. Compared with the current share price of around $61, the DCF suggests Terex trades at a 61.4% discount to this intrinsic estimate. This indicates that, within the assumptions of this model, the stock appears undervalued.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Terex is undervalued by 61.4%. Track this in your watchlist or portfolio, or discover 61 more high quality undervalued stocks.

Approach 2: Terex Price vs Earnings

For a profitable company like Terex, the P/E ratio is a useful shortcut because it links what you are paying directly to the earnings the business is already generating. It gives you a quick sense of how many dollars investors are currently willing to pay for each dollar of earnings.

What counts as a “normal” P/E depends on how the market views a company’s growth potential and risk. Higher expected growth or lower perceived risk can support a higher P/E, while lower growth or higher risk tends to align with a lower P/E.

Terex currently trades on a P/E of 31.41x, compared with the Machinery industry average of about 27.24x and a peer group average of 20.96x. Simply Wall St’s Fair Ratio for Terex is 34.73x, which is a proprietary estimate of what the P/E might be given factors such as earnings growth, industry, profit margin, market cap and risk profile.

The Fair Ratio goes further than a simple peer or industry comparison because it adjusts for those company specific drivers rather than treating all Machinery names as identical. With Terex at 31.41x versus a Fair Ratio of 34.73x, the multiple sits below that modelled level.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Terex Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so Narratives bring that idea to life by letting you attach a clear story about Terex to the numbers you care about, such as fair value, future revenue, earnings and margins.

A Narrative is simply your view of how the business might evolve, written out as a short story, then backed up with a forecast that links Terex’s business drivers to estimated financials and an implied fair value per share.

On Simply Wall St, Narratives live in the Community page, where millions of investors use them as a straightforward tool to compare their own fair value estimate with the current share price and decide whether the stock looks expensive or inexpensive relative to their story.

Because Narratives update as new information comes in, such as Terex’s earnings, guidance or news about the REV Group acquisition and Environmental Solutions segment, your fair value view can adjust without having to rebuild a model from scratch.

For Terex, one investor might align with a more optimistic Narrative that points to a Fair Value of about US$95.00. Another might lean toward a cautious Narrative closer to US$38.00, and comparing those to the current price helps each decide whether they see enough upside or downside to act.

For Terex, here are previews of two leading Terex Narratives:

Fair value in this bullish Narrative: US$95.00 per share.

Implied gap to that fair value from the recent price of US$61.06: about 35.7% below the Narrative fair value.

Revenue growth assumption: 21.13% a year.

• Assumes Terex benefits from REV Group synergies, a stronger Environmental Solutions segment and expanding digital and SaaS related revenue streams.
• Builds in higher revenue growth and rising profit margins through to 2029, with earnings and EPS projections that exceed current levels.
• Anchors the US$95.00 fair value on bullish analyst targets, using a 21.6x P/E on projected 2029 earnings and a 9.33% discount rate.

Fair value in this bearish Narrative: US$38.00 per share.

Implied gap to that fair value from the recent price of US$61.06: about 37.4% above the Narrative fair value.

Revenue growth assumption: 5.07% a year.

• Focuses on pressures from automation, tighter environmental rules, higher input costs and tougher competition that could weigh on Terex's equipment sales and margins.
• Builds in more modest revenue growth and a lower valuation multiple, with the company priced at 6.1x projected 2028 earnings in this scenario.
• Arrives at a US$38.00 fair value that sits at the low end of analyst targets, using a 9.9% discount rate and assuming the market re rates the shares to reflect these risks.

If you want to go deeper than these previews and see how other investors are connecting Terex's earnings, margins and fair value to their own stories, See what the community is saying about Terex

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.