NEW YORK (TheStreet) -- Shares of Terex Corp. (TEX) - Get Terex Corporation Report are gaining by 21.20% to $26.47 at the start of trading on Tuesday morning, after it was announced that the construction and materials company will merge with Finland-based Konecranes in an all share deal.
The newly formed combined company will be known as Konecranes Terex and the deal is expected to be completed in the first half of 2016.
"This merger brings together two great businesses and through synergies provides another lever that is within our control to deliver value-creation to both the shareholders of Terex and Konecranes," Terex CEO Ron DeFeo said in a statement.
The new company will be a supplier of cranes and equipment to various sectors including construction, mining, manufacturing and shipping. Its revenue is estimated to be about $10 billion per year.
Separately, TheStreet Ratings team rates TEREX CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate TEREX CORP (TEX) a HOLD. The primary factors that have impacted our rating are mixed-some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly increased by 3800.00% to $25.90 million when compared to the same quarter last year. In addition, TEREX CORP has also vastly surpassed the industry average cash flow growth rate of -9.56%.
- The debt-to-equity ratio is somewhat low, currently at 1.00, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.95 is somewhat weak and could be cause for future problems.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Machinery industry. The net income has significantly decreased by 39.3% when compared to the same quarter one year ago, falling from $139.80 million to $84.80 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Machinery industry and the overall market, TEREX CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full analysis from the report here: TEX Ratings Report