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Vulcan Materials Upped to Strong Buy

Zacks Equity Research

On Jan 2, Zacks Investment Research upgraded Vulcan Materials Company (VMC), to a Zacks Rank #1 (Strong Buy). Estimates have been rising ever since the construction material company reported solid third quarter 2013 results and a positive outlook for fiscal 2013.

Why the Upgrade?

On Nov 4, Vulcan Material posted third quarter fiscal 2013 results, beating the Zacks Consensus Estimate on both counts.  

Vulcan’s third-quarter adjusted earnings of 32 cents per share surpassed the Zacks Consensus Estimate by 28%. Earnings per share improved significantly from the prior-year quarter on the back of solid revenue increase in most of the segments. Total revenue beat the Zacks Consensus Estimate by 7.6% and increased 11.6% from the prior-year quarter owing to pricing gains and volume growth.

The growth was driven by improved product demand owing to broad based recovery in private construction activity, especially residential. Improved demand also favored pricing across most of its markets.

With the housing market gaining momentum, demand for Vulcan’s products, both aggregates as well as non-aggregates, is improving

Interestingly, most of the volume and pricing increase in the third quarter was noted in the aggregates segment. After being weak in 2012, management is seeing improving demand trends in aggregates’ segment as private construction demand is growing. Especially, Vulcan is seeing improvement in key markets like Florida, Texas, California, Georgia and Arizona.

The company expects earnings to improve in the fourth quarter as well on the back of pricing growth, funding stability, aggressive cost control and volume increase.

Other Stocks to Consider

Other stocks worth considering in the industrial goods sector include Masco Corp. (MAS), CaesarStone Sdot-Yam Ltd. (CSTE) and James Hardie Industries plc (JHX). While CaesarStone Sdot-Yam and James Hardie Industries carry a Zacks Rank #1 (Strong Buy), Masco Corporation carries a Zacks Rank #2 (Buy).

Read the Full Research Report on VMC
Read the Full Research Report on CSTE
Read the Full Research Report on MAS
Read the Full Research Report on JHX

Zacks Investment Research