Over the past several quarters, Terex has enjoyed solidifying end markets, improved internal operations, and an appreciating stock price, but we think the company has a runway for further improvement. Although the firm holds sizable exposure to Western Europe (more than one fourth of total revenue), some leading signs in the region have proved encouraging in recent months. Moreover, the U.S. nonresidential construction picture has seemingly bottomed, and indicators here also suggest improvement in the coming quarters. Along with better cost control, continued working capital improvement, and further integration of acquired companies, this environment should help Terex expand its operating margin over the next few years, with potential for additional debt reduction as well. In all, we think the company's prospects remain sound, and the market currently offers a decent margin of safety for investors.
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