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Heavy Construction Stocks' Earnings to Watch: CBI, EME, GVA

Zacks Equity Research

This is an eventful, decisive week for the season, with almost 1000 companies releasing their numbers. With macroeconomic conditions still soft, earnings growth is projected to be negative for 9 of the 16 Zacks sectors (as of Jul 21). This shows that the weakness is quite broad-based, though the energy sector still remains the biggest drag. Further, growth for the benchmark S&P 500 index is on track to be in the red for the fifth quarter in a row.

As of Jun 22, we had results from 126 S&P 500 members, of which about 70.6% have posted earnings beats and 55.6% trumped top line estimates.

On the whole, our latest data projects that earnings for S&P 500 companies are now on track to decline 3.4% from the year-ago period, on 0.5% lower revenues. This is comparable to a decline of 6.2% expected a fortnight ago. This change hints toward some tell-tale signs of improvement in the overall earnings picture, which still appears bleak. (Read more: Decisive Week for the Q2 Earnings Season)

The construction sector is one of the few bright spots in the dull picture. The sector is expecting double-digit growth this quarter, with earnings expected to grow 10.8% on 5.1% higher sales from the last year.

The Heavy Construction industry has major players like Chicago Bridge & Iron Company N.V. CBI, Granite Construction Incorporated GVA and EMCOR Group Inc. EME reporting numbers soon. Other players like Primoris Services Corporation PRIM,Tutor Perini Corporation TPC, Great Lakes Dredge & Dock Corporation GLDD are about to report next week.

Let’s have a look at how Chicago Bridge & Iron, Granite Construction and EMCOR are poised ahead of their scheduled announcements this week.

Chicago Bridge & Iron: This company designs, builds, repairs and modifies steel tanks and other steel plate structures and associated systems. It ranks among the world’s leading integrated engineering, procurement and construction service provider and major process technology licensors.

The company has recorded a mixed surprise history over the trailing four quarters, with a beat and a miss each, along with two in-line earnings. The company posted an average negative surprise of 0.9% over the trailing four quarters. Last quarter, it missed estimates by 11.4%.

The company is vulnerable to geopolitical uncertainties like a slowdown in China and foreign currency risks. However, Chicago Bridge & Iron believes that it can capitalize on the lucrative opportunities in the North American and African regions, which should induce growth across its segments.

Chicago Bridge & Iron presently has an Earnings ESP of -3.28% and a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for the quarter is pegged at $1.22.

CHICAGO BRIDGE Price and EPS Surprise

CHICAGO BRIDGE Price and EPS Surprise | CHICAGO BRIDGE Quote

Granite Construction: This company operates as a heavy civil contractor and a construction materials producer in the United States. Granite Construction has had a choppy earnings history in recent times, with earnings beating estimates thrice and missing once in the trailing four quarters, registering a negative surprise of 41%. Last quarter, it missed estimates by a whopping 133.3%.

However, the company is enjoying solid backlog trends, and its results will likely benefit from the good momentum in its Construction segment. Its vertically integrated business, multiple award wins and Kenny Construction business remain on track to drive growth this year.

The company has an Earnings ESP of 0.00% and a Zacks Rank #3. The Zacks Consensus Estimate for the quarter is pegged at 43 cents.

GRANITE CONSTRU Price and EPS Surprise

GRANITE CONSTRU Price and EPS Surprise | GRANITE CONSTRU Quote

EMCOR: EMCOR is one of the leading providers of mechanical and electrical construction, industrial and energy infrastructure, and building services for a diverse range of businesses. The company serves commercial, industrial, utility and institutional clients.

The company recorded a mixed surprise history over the trailing four quarters, having missed estimates twice for as many beats. The company has an average positive surprise of 1.4% over the trailing four quarters. Last quarter, it missed estimates by 1.7%.

EMCOR remains vulnerable to intensifying competition, foreign currency translation and crude volatility. However, its accretive acquisitions, streamlined costs and Mechanical Construction segment should propel growth for the company.

EMCOR presently has an Earnings ESP of 0.00% and a Zacks Rank #3. The Zacks Consensus Estimate for the quarter is pegged at 71 cents.

EMCOR GROUP INC Price and EPS Surprise

EMCOR GROUP INC Price and EPS Surprise | EMCOR GROUP INC Quote

Keep an eye on our full earnings articles to see how these players finally fared in quarter.

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CHICAGO BRIDGE (CBI): Free Stock Analysis Report
 
EMCOR GROUP INC (EME): Free Stock Analysis Report
 
GREAT LAKES DRG (GLDD): Free Stock Analysis Report
 
GRANITE CONSTRU (GVA): Free Stock Analysis Report
 
PRIMORIS SERVCS (PRIM): Free Stock Analysis Report
 
TUTOR PERINI CP (TPC): Free Stock Analysis Report
 
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