Non-Residential Market, Pricing to Aid Vulcan's (VMC) Q2 Earnings
Vulcan Materials Company VMC is scheduled to release second-quarter 2023 results on Aug 3, before the opening bell.
In the last reported quarter, the company’s adjusted earnings and revenues topped the Zacks Consensus Estimate by 48.4% and 4.3%, respectively. On a year-over-year basis, earnings and revenues increased 30.1% and 7%, respectively.
Vulcan Materials’ earnings topped the consensus mark in two of the last four quarters and missed on other two occasions, the average surprise being 7.1%.
The Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share has been revised upward to $1.91 from $1.90 over the past 30 days. The estimated figure indicates a rise of 24.8% from the year-ago quarter.
Vulcan Materials Company Price and EPS Surprise
Vulcan Materials Company price-eps-surprise | Vulcan Materials Company Quote
The consensus estimate for revenues is pegged at $2.06 billion, suggesting 5.5% year-over-year growth.
Factors to Note
Vulcan is likely to have generated higher revenues and earnings in the second quarter of 2023 on the back of higher spending from a number of states that it serves. Higher non-residential construction activities and incremental federal funding from the Infrastructure Investment and Jobs Act are supposed to have acted as a tailwind for VMC. Also, resilient pricing across the product lines is expected to have supported the growth.
The aggregates business (including crushed stone, sand and gravel, along with other aggregates) has been a major contributor to revenue growth. Efforts to enhance operational excellence, acquisition synergies and cost-control measures are expected to have aided the bottom line.
Our model suggests net sales from the Aggregates segment (accounting for 78.5% of total revenues in the first quarter) to grow 6% to $1,486.3 million from a year ago.
However, reduced residential demand due to lower permits and starts in single-family homes, along with railroad bottlenecks and other inflationary pressures, are expected to have ailed results. Also, higher repair & maintenance costs and supply & contract costs may have been risks.
Our models suggest net sales from the Asphalt Mix segment (10.3% of total revenues) to be $264.8 million, indicating a 3.6% decline from a year ago. We also anticipate revenues from the Concrete segment (accounting for 17.3% of total revenues) to decline 4.7% to $402.3 million from a year ago.
The Calcium segment’s net sales are expected to be $2.3 million, suggesting growth from $1.4 million a year ago.
We also predict Aggregates volumes to decline 9% year over year, whereas volumes for Asphalt Mix, Concrete and Calcium units are likely to grow 3.5%, 0.8% and 7.1% year over year, respectively.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for Vulcan this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.
Earnings ESP: It has an Earnings ESP of -0.94%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #3.
Stocks With the Favorable Combination
Here are some other companies in the Zacks Construction sector that, according to our model, have the right combination of elements to post an earnings beat in the quarter to be reported.
Louisiana-Pacific Corporation LPX — a Nashville, TN-based home construction supplier — topped earnings estimates in three of the trailing four quarters and missed once, the average being 98.2%.
Louisiana-Pacific is likely to beat expectations when it reports second-quarter 2023 results on Aug 2, before the opening bell. This Zacks Rank #3 company presently has an Earnings ESP of +5.54%.
AECOM ACM — a Los Angeles, CA-based company — beat earnings estimates in all the last four quarters, the average surprise being 4.8%. The company is poised to beat expectations when it reports third-quarter fiscal 2023 results on Aug 7, after market close. It has an Earnings ESP of +1.05% at present. The Zacks Consensus Estimate for AECOM’s fiscal third-quarter earnings is pegged at 95 cents per share, implying growth of 10.5% from the year-ago reported figure.
ACM carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Willdan Group, Inc. WLDN currently has an Earnings ESP of +108.33% and a Zacks Rank #3.
WLDN’s earnings for the to-be-reported quarter are expected to increase by 300%. The company reported better-than-expected earnings in two of the last four quarters and missed on two occasions, the average surprise being 1,289.3%.
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Vulcan Materials Company (VMC) : Free Stock Analysis Report
AECOM (ACM) : Free Stock Analysis Report
Louisiana-Pacific Corporation (LPX) : Free Stock Analysis Report
Willdan Group, Inc. (WLDN) : Free Stock Analysis Report
