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Vulcan Materials Company (NYSE:VMC) missed earnings with its latest third-quarter results, disappointing overly-optimistic forecasters. Results look to have been somewhat negative - revenue fell 4.5% short of analyst estimates at US$1.3b, and statutory earnings of US$1.50 per share missed forecasts by 7.5%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the 16 analysts covering Vulcan Materials are now predicting revenues of US$4.99b in 2021. If met, this would reflect a modest 2.4% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to accumulate 8.6% to US$5.03. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$5.02b and earnings per share (EPS) of US$5.02 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$151, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Vulcan Materials, with the most bullish analyst valuing it at US$183 and the most bearish at US$120 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Vulcan Materials' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Vulcan Materials' revenue growth will slow down substantially, with revenues next year expected to grow 2.4%, compared to a historical growth rate of 8.8% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.8% per year. Factoring in the forecast slowdown in growth, it seems obvious that Vulcan Materials is also expected to grow slower than other industry participants.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$151, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Vulcan Materials going out to 2024, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Vulcan Materials , and understanding this should be part of your investment process.
This article by Simply Wall St is general in nature. 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.
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