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A month has gone by since the last earnings report for Valmont Industries (VMI). Shares have added about 0.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Valmont due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Valmont's Earnings & Revenues Surpass Estimates in Q2
Valmont registered profits of $22.6 million or $1.06 per share in second-quarter 2020, down from $39.7 million or $1.82 per share in the year-ago quarter. Barring one-time items, adjusted earnings were $2.00 per share for the reported quarter, beating the Zacks Consensus Estimate of $1.47.
Revenues in the quarter were $688.8 million, down 1.7% year over year. The figure, however, surpassed the Zacks Consensus Estimate of $648.8 million. Strong growth in Utility Support Structures was more than offset by reduced sales in the Coatings segment due to the impacts of the coronavirus outbreak.
Sales in the Engineered Support Structures segment fell 2.1% year over year to $253.4 million due to unfavorable currency impacts of $6.1 million.
Sales in the Utility Support Structures segment rose 10.2% year over year to $231.3 million on account of substantially larger volumes from strong market demand, capacity additions and favorable pricing.
Sales in the Coatings segment declined 18.7% year over year to $80 million as higher internal volumes were more than offset by lower external volumes due to the coronavirus outbreak’s effects on end customers and temporary international facility closures.
Sales in the Irrigation unit amounted to $150.6 million, down 3% year over year. Sales in North America were $99 million, down 3.7% year over year. Higher sales of irrigation products and pricing were offset by lower industrial tubing sales.
International irrigation sales fell 1.5% year over year to $51.6 million.
Valmont ended the second quarter with cash and cash equivalents of $353.3 million, up 37.5% year over year. Long-term debt stood at $778.3 million, up 1.6% year over year.
Cash flows from operating activities were $150.7 million for the year-to-date period (as of Jun 27, 2020), up from $113.4 million for the same period a year ago (as of Jun 29, 2019).
The company expects net sales of $680-700 million for third-quarter 2020. It also expects operating profit margins of 8-9% for the third quarter.
Valmont anticipates revenues from the Utility Support Structures segment to increase around 20% year over year for the third quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 19.35% due to these changes.
At this time, Valmont has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Valmont has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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