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Construction Stock Earnings Due on Oct 28: MAS, URI, OC, RYN

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Shrabana Mukherjee
·6 min read
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The Zacks Construction sector started the earnings season on a positive note, unlike most of the other sectors, backed by robust housing market dynamics despite coronavirus-led market disruptions. Of the total 16 Zacks sectors, Construction and Medical are the only sectors that are expected to reflect earnings growth.

Resilient housing market fundamentals in the United States buoyed by the Fed’s dovish stance, low borrowing costs and lack of available supply are expected to have benefited the companies’ top lines.

A number of project awards across multiple business segments — including communications, transmission and power, along with infrastructural projects in domestic as well as international markets — also contributed significantly to the companies’ performance. Again, increasing defense spending in major economies like the United States, rising public investments in water infrastructure and utility plants, as well as encouraging prospects in the healthcare market are expected to have acted as tailwinds.

However, higher land and labor costs, along with the shortage of home supplies might have offset the positives. Record low inventory level has been deterring prospective buyers, especially first-timers. Furthermore, widespread slowdown in economic activity owing to the coronavirus outbreak might have weighed on the companies’ profitability. Overall, project delays and cancellations are expected to reflect on Q3 results.

Overall Prediction

Per the latest Earnings Preview, construction sector earnings are expected to grow 12.3% year over year for the third quarter versus 1.9% decline in second-quarter 2020. Revenues are projected to increase 3.6% year over year against 1.8% decline in the second quarter.

Notable Recent Releases

Some notable construction companies like Meritage Homes Corporation MTH and NVR, Inc. NVR recently released quarterly numbers.

Meritage Homes reported third-quarter 2020 results, wherein earnings and revenues not only surpassed the Zacks Consensus Estimate but also improved significantly on a year-over-year basis.

NVR reported better-than-expected results for third-quarter 2020, wherein earnings and revenues topped the Zacks Consensus Estimate. The quarterly results benefited from solid housing market fundamentals in the United States, courtesy of low mortgage rates.

Construction Stocks to Watch

Let’s take a quick glance at how the following construction stocks are poised ahead of their quarterly earnings releases on Oct 28.

Our proven model shows that companies with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP have higher chances of beating earnings estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Masco Corporation MAS is slated to report third-quarter 2020 results before the opening bell. In the last reported quarter, the company’s revenues and earnings beat the Zacks Consensus Estimate by 4.2% and 18.3%, respectively. In fact, Masco’s earnings topped the consensus mark in three of the last four quarters and missed once, with the average surprise being 11.3%, as shown in the chart below:

The chances of Masco delivering an earnings beat in the third quarter are high, as it has an Earnings ESP of +2.23% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Masco’s third-quarter earnings is pegged at 79 cents per share, implying 16.2% growth on a year-over-year basis. The consensus estimate for revenues is $1.85 billion, indicating a 4.9% year-over-year decline (read more: Masco to Report Q3 Earnings: What's in the Cards?).

Masco Corporation Price and EPS Surprise

Masco Corporation Price and EPS Surprise
Masco Corporation Price and EPS Surprise

Masco Corporation price-eps-surprise | Masco Corporation Quote

United Rentals, Inc. URI is slated to report third-quarter 2020 results after the closing bell. In the last reported quarter, the company’s earnings and revenues beat the Zacks Consensus Estimate by 90.7% and 6.9%, respectively. Markedly, its earnings surpassed expectations in 26 of the last 28 quarters, as shown in the chart below:

Similar to Masco, the chances of United Rentals delivering an earnings beat in the third quarter are high, as it has an Earnings ESP of +5.32% and a Zacks Rank #3.

The Zacks Consensus Estimate for its third-quarter earnings is pegged at $4.33 per share, implying a 27.4% decline on a year-over-year basis. The consensus estimate for revenues is $2.14 billion, indicating a 14.1% year-over-year decline (read more: United Rentals to Report Q3 Earnings: What's in Store?).

United Rentals, Inc. Price and EPS Surprise

United Rentals, Inc. Price and EPS Surprise
United Rentals, Inc. Price and EPS Surprise

United Rentals, Inc. price-eps-surprise | United Rentals, Inc. Quote

Owens Corning OC is slated to report third-quarter 2020 results before the opening bell. In the last reported quarter, the company’s revenues and earnings beat the Zacks Consensus Estimate by 238.5% and 6%, respectively. In fact, Owens Corning’s earnings topped the consensus mark in all the last four quarters, with the average surprise being 63.8%, as shown in the chart below:

Similar to Masco and United Rentals, the chances of Owens Corning delivering an earnings beat in the third quarter are high, as it has an Earnings ESP of +21.84% and a Zacks Rank #2.

The Zacks Consensus Estimate for its third-quarter earnings is pegged at $1.32 per share, implying a 19% decline on a year-over-year basis. The consensus estimate for revenues is $1.8 billion, indicating a 4.6% year-over-year decline.

Owens Corning Inc Price and EPS Surprise

Owens Corning Inc Price and EPS Surprise
Owens Corning Inc Price and EPS Surprise

Owens Corning Inc price-eps-surprise | Owens Corning Inc Quote

Rayonier Inc. RYN is slated to report third-quarter 2020 results after the closing bell. In the last reported quarter, the company’s earnings and revenues beat the Zacks Consensus Estimate by 1000% and 32.3%, respectively. In fact, Rayonier’s earnings topped the consensus mark in two of the last four quarters and missed on the other two occasions, with the average surprise being 205%, as shown in the chart below:

Its chances of delivering an earnings beat are low this time around as it has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.

The Zacks Consensus Estimate for the company’s third-quarter earnings is pegged at 2 cents per share. In the year-ago period, it reported break-even earnings. The consensus estimate for revenues is $182.3 million, indicating a 16.5% year-over-year increase.

Rayonier Inc. Price and EPS Surprise

Rayonier Inc. Price and EPS Surprise
Rayonier Inc. Price and EPS Surprise

Rayonier Inc. price-eps-surprise | Rayonier Inc. Quote

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Rayonier Inc. (RYN) : Free Stock Analysis Report
 
Masco Corporation (MAS) : Free Stock Analysis Report
 
NVR, Inc. (NVR) : Free Stock Analysis Report
 
Owens Corning Inc (OC) : Free Stock Analysis Report
 
United Rentals, Inc. (URI) : Free Stock Analysis Report
 
Meritage Homes Corporation (MTH) : Free Stock Analysis Report
 
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