Why Is Valmont (VMI) Up 5.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Valmont Industries (VMI). Shares have added about 5.6% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Valmont's Q3 Earnings Top Estimates, Revenues Lag
Valmont reported a loss of $49 million or $2.34 per share in third-quarter 2023, down from a profit of $72.1 million or $3.34 per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share were $4.12, up from $3.49 in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of $3.78.
The company’s revenues were $1,050.3 million in the quarter, down 4.3% year over year. The top line lagged the Zacks Consensus Estimate of $1,100.3 million.
Segment Review
The third-quarter revenues in the infrastructure segment remained on par with the previous year, totaling $755.1 million. It lagged our estimate of $850.6 million. This was primarily attributed to greater sales volumes, particularly in the Solar, Lighting and Transportation and Transmission, Distribution and Substation product categories. Although there was a decline in Telecommunications volumes and reduced pricing due to lower steel costs in the TD&S product line, this was offset by higher pricing in other segments of the product portfolio.
Agriculture segment revenues totaled $298.5 million, down 8.8% year over year. It fell short of our estimate of $376.1 million. Global sales of agricultural technology products and services remained consistent with the previous year. In North America, the decline in sales was primarily attributed to reduced sales volumes of irrigation equipment, in line with the anticipated muted farmer sentiment for the quarter. In the third quarter of 2022, the company saw benefits from delivering an elevated backlog. Selling prices for irrigation equipment were in line with last year's averages. On the international front, sales growth was fueled by increased project sales in the EMEA region, record sales in Brazil and higher sales in Argentina.
Financials
The company ended the quarter with cash and cash equivalents of $172.6 million, up 4% year over year. Long-term debt was $977.3 million, up 4.5% year over year.
Valmont repurchased $31.5 million of its stock during the quarter. It had $314.7 million remaining on the share repurchase program at the end of the quarter.
Outlook
For 2023, Valmont revised its guidance for net sales growth to be -3 to -4% from its previous view of 0-2%.EPS (as reported) is expected to be $7.20 to $7.50 per share. Adjusted EPS is now forecast at $14.80 to $15.10. It also anticipates capital expenditures in the $100-$110 million range for 2023. The company also expects a full-year improved operating margin compared with 2022 levels.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -19.49% due to these changes.
VGM Scores
At this time, Valmont has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Valmont has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Valmont Industries, Inc. (VMI) : Free Stock Analysis Report
