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U.S. Dredging Operation to Aid Great Lakes (GLDD) Q2 Earnings

Zacks Equity Research

Great Lakes Dredge & Dock Corporation GLDD is slated to report second-quarter 2019 results on Jul 31. This largest provider of dredging services in the United States has a strong record of earnings surprises, having surpassed the Zacks Consensus Estimate in the trailing four quarters, with the average being an impressive 547.6%.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 357.1%. Also, it reported earnings of 32 cents per share in the first quarter, turning around from a loss of 11 cents in the year-ago period.

Quarterly revenues of $192.6 million topped analysts’ expectation by 7%. Also, the said figure increased 44.2% from the prior-year quarter, backed by strong production and impressive project performance.

Which Way are Estimates Trending?

Let’s take a look at the estimate revision trend in order to get a clear picture of what analysts are thinking about the company prior to the earnings release.

The Zacks Consensus Estimate for the quarter to be reported is pegged at 12 cents, remaining stable over the past 60 days. Nonetheless, this indicates an improvement of 700% from the year-ago quarter. Revenues are expected to be $207.5 million, suggesting a 37.8% year-over-year increase.

Great Lakes Dredge & Dock Corporation Price and EPS Surprise

 

Great Lakes Dredge & Dock Corporation Price and EPS Surprise

Great Lakes Dredge & Dock Corporation price-eps-surprise | Great Lakes Dredge & Dock Corporation Quote

Factors That Might Influence the Upcoming Results

Great Lakes is likely to come up with strong results in the to-be-reported quarter, owing to solid domestic dredging operations, high equipment utilization and improved project execution. In fact, a high activity level and solid backlog ($575.2 million as of Mar 31, 2019) are likely to boost its quarterly revenues.

Great Lakes has been booking a significant amount of projects, particularly from the largest domestic customer, the U.S. Army Corps of Engineers. This remains a positive for the to-be-reported quarter.

Overall, higher contribution from dredging businesses in domestic and international markets, and solid maintenance dredging operations are expected to aid the company’s revenues. Along with this, strong performance of the company’s rivers & lakes projects is expected to help it boost margins. Lower plant costs arising from the retirement of certain underperforming and underutilized assets, and greater fixed cost coverage are expected to boost its profit level.

Here Is What Our Quantitative Model Predicts:

Our proven model does not conclusively show that Great Lakes is likely to beat on earnings in the to-be-reported quarter. 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.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: It currently has a Zacks Rank #2, which increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings surprise.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks With Favorable Combination

Here are some construction companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming releases:

KBR, Inc. KBR has an Earnings ESP of +1.16% and holds a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Rayonier Inc. RYN has an Earnings ESP of +19.15% and carries a Zacks Rank #3.

Jacobs Engineering Group Inc. JEC has an Earnings ESP of +1.60% and a Zacks Rank #3.

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