Here's Why You Should Add Valmont (VMI) to Your Portfolio
Valmont Industries, Inc. VMI has found success through its presence in markets with strong and consistent demand that are resilient to economic fluctuations.
As a Zacks Rank #1 (Strong Buy) stock, it presents an attractive investment option with growth prospects and an impressive earnings track record.
Estimates Going Up
The Zacks Consensus Estimate for VMI's second-quarter 2023 earnings has increased approximately 1.3% over the past two months.
Positive Earnings Surprise History
Valmont has outperformed the Zacks Consensus Estimate in three of the last four quarters and missed in one. It delivered a trailing four-quarter average earnings surprise of around 5.4%.
Healthy Growth Potential
The Zacks Consensus Estimate for 2023 earnings is currently pegged at $15.7, implying year-over-year growth of 13.6%. Moreover, earnings are expected to register 8.5% growth in 2024.
Price Performance
VMI has shown strong price performance, gaining 28.5% in the past year, outperforming the industry’s rise of 9.9% during the same period.
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Growth and Value Creation
By strategically investing in niche markets, the company has demonstrated its commitment to adding significant value through product leadership, a flexible global footprint, and innovative technology. These strategic investments have provided a solid growth platform for the company's future endeavors.
In the Infrastructure sector, VMI is capitalizing on opportunities driven by the global energy transition and increased utility spending. The company's thriving solar business anticipates further demand once clarity is attained regarding the implementation of the Inflation Reduction Act. Additionally, VMI expects to benefit from the Infrastructure Investment and Jobs Act in the transportation markets, beginning in 2024.
Valmont's Agriculture segment is benefiting from positive global market fundamentals and a strengthening market in Brazil. With substantial growth in agricultural exports and corn output, the company has proactively invested in additional factory capacity to meet rising market demand and enhance customer service levels. The robust project pipeline in this sector provides a clear line of sight for future growth opportunities.
Despite facing temporary challenges in North America due to changing order patterns and challenging comparisons, Valmont expects a return to more normalized order flow in the second half of the year. The company remains committed to strategic pricing, efficient cost management and safeguarding margins.
Furthermore, Valmont has announced a definitive agreement to acquire HR Products, a leading wholesale supplier of irrigation parts in Australia. This strategic move expands Valmont's geographic footprint and strengthens its parts presence in a key agriculture market.
The acquisition aligns with Valmont's global agriculture growth strategy, with a focus on aftermarket parts and services. By extending its offerings, Valmont can better serve its customers and tap into the substantial market for replacing wearable irrigation parts. This acquisition positions the company to generate recurring, high-value revenue streams that help mitigate cyclicality in the agriculture business.
With its strong financial performance, strategic investments and adept navigation of market dynamics, Valmont Industries is optimistic about its prospects. The company remains focused on executing growth strategies, maintaining profitability and creating long-term value for shareholders.
Valmont Industries, Inc. Price and Consensus
Valmont Industries, Inc. price-consensus-chart | Valmont Industries, Inc. Quote
Other Key Picks
Some other top-ranked stocks in the basic materials space include ATI Inc. ATI and PPG Industries, Inc. PPG, each sporting a Zacks Rank #1, and Linde Plc LIN, carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ATI’s current-year earnings has been revised 3.7% upward in the past 60 days. ATI beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 13%. The company’s shares have rallied 99.4% in the past year.
The Zacks Consensus Estimate for PPG’s current-year earnings has been revised 6.3% upward in the past 90 days. PPG beat the Zacks Consensus Estimate in three of the last four quarters and missed once, with the average earnings surprise being 6.8%. The company’s shares have gained 30.1% in the past year.
The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 0.7% upward in the past 60 days. Linde beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 6.9% on average. The company’s shares have risen roughly 33.5% in the past year.
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