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Why Is Vulcan (VMC) Up 4.2% Since Last Earnings Report?

·4 min read

It has been about a month since the last earnings report for Vulcan Materials (VMC). Shares have added about 4.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Vulcan 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.

Vulcan Materials (VMC) Q4 Earnings & Revenues Beat Estimates

Vulcan Materials Company reported fourth-quarter 2020 results, with earnings and revenues surpassing the Zacks Consensus Estimate. However, both the metrics declined on a year-over-year basis.

Inside the Headlines

Vulcan Materials — which is one of the largest producers of construction aggregates — reported adjusted earnings of $1.07 per share, beating the consensus mark of 99 cents by 8.1%. However, the company’s bottom line declined 0.9% on a year-over-year basis.

Total revenues of $1,175.1 million surpassed the consensus mark of $1,140 million. However, it declined 0.9% year over year.

Segments in Detail

Aggregates

During the fourth quarter, revenues in the segment dropped 0.4% year over year to $956.5 million. Aggregate shipments (volumes) were down 1% year over year.

For the quarter under review, freight-adjusted average sales price increased 3.3% from the prior-year quarter. Freight-adjusted revenues also increased 2.3% year over year to $737.3 million.

Gross profit of $276 million was up 0.5% year over year. Adjusted gross margin — as a percentage of segment sales — declined 60 basis points (bps) to 36.7% (excluding freight & delivery).

Asphalt, Concrete and Calcium

Revenues in the Asphalt segment were $194.7 million, down 5.7% year over year. The segment reported gross profit of $17 million, up 53.4% from the year-ago level driven by an increase in material margin.

Total revenues in the Concrete segment were $85.4 million, down 10.4% year over year. However, gross profit totaled $8.6 million, up 28.5% year over year. For the fourth quarter, shipments fell 12% year over year. Average selling prices rose 2% year over year.

Total revenues in the Calcium segment were up 15.7% year over year to $2.5 million. The segment reported gross profit of $1.2 million, increasing 44.7% from the prior-year level.

Operating Highlights

For the quarter, Selling, Administrative and General or SAG expenses — as a percentage of total revenues — increased 30 bps year over year to 8.4%.

Adjusted EBIT increased 3.7% from the prior-year quarter to $210.3 million. Adjusted EBITDA also rose 4.3% year over year to $311.2 million.  Notably, the improvement was backed by aggregates price growth and effective cost management.

Financials

As of Dec 31, 2020, cash and cash equivalents were $1,197.1 million, up from $271.6 million at 2019-end. Long-term debt was $2,772.2 million, slightly down from the year-ago level.

In 2020, Vulcan Materials returned $180 million to shareholders through dividends, reflecting an increase of 10% from the prior year. So far this year, the company has repurchased $26 million in common stock.

2020 Highlights

Total revenues for 2020 came in at $4,856.8 million compared with $4,929.1 million in 2019.

Adjusted EBITDA for 2020 came in at $1323.5 million compared with $1,270 million in 2019.

In 2020, adjusted EPS came in at $4.68 compared with $4.70 in the previous year.

2021 Outlook

For 2021, the company anticipates adjusted EBITDA in the range of $1.340-$1.440 billion. SAG expenses are expected in the range of $365-$375 million. EPS for 2021 are anticipated between $4.80 and $5.40.

Meanwhile, Vulcan Materials expects year-over-year growth in aggregates freight-adjusted price between 2% and 4%. Also, it expects aggregates shipments in the range of (2%) to 2% growth from the 2020 level. Depreciation, depletion, accretion and amortization expenses are expected to be $400 million. Nonetheless, the company remains optimistic about the pricing environment in 2021.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

Currently, Vulcan has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. 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. Notably, Vulcan has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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