The Zacks Analyst Blog Highlights United Rentals, Construction Partners, Martin Marietta, Dycom and Quanta
For Immediate Release
Chicago, IL – July 18, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: United Rentals, Inc. URI, Construction Partners, Inc. ROAD, Martin Marietta Materials, Inc. MLM, Dycom Industries, Inc. DY and Quanta Services Inc. PWR.
Here are highlights from Monday’s Analyst Blog:
Here's How Construction Is Poised This Earnings Season
The Zacks Construction sector poses strength for the upcoming earnings season despite comparatively slow housing industry parameters and macroeconomic headwinds. The new residential construction market has been showing signs of improvements of late, owing to a lack of existing homes for sale. Again, industries dependent on the housing market are set to gain from the improvements.
The sequential improvement in the Zacks Building Products - Home Builders industry, solid infrastructural and public construction spending, increased R&R activities and favorable pricing dynamics have been aiding companies like United Rentals, Inc., Construction Partners, Inc., Martin Marietta Materials, Inc., Dycom Industries, Inc. and Quanta Services Inc. These companies are also gaining from their fundamental strength and cost-containment efforts.
In the past three months, the construction sector and the S&P 500 index have grown 18.8% and 9%, respectively.
Solid Non-Residential Infrastructure Opportunities & Operational Excellence
The non-residential sector is presently rallying, as the government has increased focus on infrastructure modernization and energy transition efforts. President Joe Biden’s massive infrastructure plan to build modern sustainable infrastructure, and new climate-resilient and broadband initiatives are likely to boost the construction industry over the next five years. Meanwhile, solid momentum in the R&R markets is expected to drive growth in the upcoming quarter.
The industry participants have been undertaking strong cost-saving initiatives like business consolidation, system implementations, plant/branch closures, improvement in the global supply chain, and headcount reductions to maintain their liquidity and de-risk business. The companies are also strategically indulging in expansion moves to boost profitability.
Solid Focus on Fiber Deployment & Renewable Business
Major companies have been constructing or upgrading significant wireline networks across broad sections of the country. These wireline networks are generally designed to provide gigabit network speeds to individual consumers and businesses, either directly or wirelessly through 5G technologies. Increasing access to high-capacity telecommunications continues to be crucial for society, especially in rural America. The Infrastructure Investment and Jobs Act includes more than $40 billion for the construction of rural communications networks in unserved and underserved areas across the country.
Moreover, companies providing technology solutions to boost decarbonization, carbon capture, renewable fuels and green energy solutions are expected to boost the sector in the near term.
Stocks to Bet On
Headquartered in Stamford, CT, United Rentals is the largest equipment rental company in the world. This company has been gaining from better fleet productivity on broad-based rental demand in construction and industrial verticals. URI, which belongs to the Zacks Building Products - Miscellaneous industry, remains optimistic for the rest of 2023, courtesy of growth opportunities across its verticals, with persistent growth opportunities for data centers, distribution centers and renewables, as well as the automotive and ship plant projects.
URI, with a Zacks Rank #2 (Buy) at present, has gained 15% over the past three months. It surpassed earnings estimates in two of the trailing four quarters and missed on the other two occasions, the average surprise being 4.2%. URI has seen an upward estimate revision of 3 cents for current-quarter earnings over the past 30 days to $9.23 per share. The company’s earnings for the said period are expected to increase 17.4% on 23.9% higher revenues. Also, it carries an impressive VGM Score of A.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Headquartered in Dothan, AL, Construction Partners engages in the construction and maintenance of roadways across Alabama, Florida, Georgia, North Carolina and South Carolina. The company has benefited from solid end-market demand for infrastructure services throughout the private and public sectors, the consistent execution of its business model, and a growth strategy that defies labor, inflation and supply-chain challenges.
Its recent acquisitions and the sale of Daurity Springs Quarry will help the company expand operations into fast-growing markets, while maintaining its leverage ratio. Construction Partners’ organic and inorganic growth opportunities in the attractive Southeastern United States road construction/repair market are expected to help the company generate higher revenues.
ROAD, a Zacks Rank #1 stock at present, has gained 11.9% over the past three months. The company surpassed earnings estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 30.8%. The company’s earnings for the said period are expected to increase 47.8% on 14.1% higher revenues. ROAD, which also belongs to the Zacks Building Products - Miscellaneous industry, has an impressive VGM Score of A.
Based in Raleigh, NC, Martin Marietta produces and supplies construction aggregates and other heavy building materials, mainly cement, in the United States. Expanded infrastructure investment, recovering private non-residential and residential markets, heavy industrial projects of scale, large-scale energy projects and domestic manufacturing are expected to support near-term shipment levels of the company.
MLM has been realigning its overall portfolio for opportunities to maximize value by monetizing or exchanging select assets. Also, proficient acquisitions have been enhancing its reach in new geographies for consistent industry-leading growth.
Martin Marietta, which belongs to the Zacks Building Products - Concrete & Aggregates industry, currently carries a Zacks Rank #2. The company's shares have rallied 29.4% in the past three months. Earnings estimates for current quarter indicate 20.2% year-over-year growth. Revenues are likely to grow 19.7% from the previous year. It has a VGM Score of B. MLM surpassed earnings estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 31%.
Based in Palm Beach Gardens, FL, Dycom is a specialty contracting service provider in the United States. The company has been benefiting from the higher demand for network bandwidth and mobile broadband, extended geographic reach, and proficient program management and network planning services.
The prospects of the Telecommunication business look good, given the increased customer needs to expand capacity and improve the performance of existing networks, and, in certain instances, deploy new networks. Dycom, which belongs to the Zacks Building Products - Heavy Construction industry, expects considerable opportunities across the business in near term.
Dycom, currently sporting a Zacks Rank #1, has rallied 16.7% over the past three months compared with the industry’s 25.1% rise. Earnings per share for the current quarter are expected to grow 13.7% year over year, with a 7.2% rise in revenues. DY surpassed earnings estimates in the trailing four quarters, the average surprise being 153.7%.
Quanta Services is a leading national provider of specialty contracting services and one of the largest contractors serving the transmission and distribution sector of the North America electric utility industry. The company has been capitalizing on megatrends to lead the energy transition and enable technological development. Initiatives toward a reduced-carbon economy continue to drive the demand for PWR’s services and depict incremental growth opportunities.
PWR, which belongs to the Zacks Engineering - R and D Services industry, currently carries a Zacks Rank #2. The company's shares have rallied 16.9% in the past three months. Earnings estimates for this quarter suggest 8.4% year-over-year growth. Revenues are likely to grow 10.9% from that reported in the previous year. The company has a VGM Score of B. PWR surpassed earnings estimates in three of the trailing four quarters and met on one occasion, the average surprise being 4.8%.
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Quanta Services, Inc. (PWR) : Free Stock Analysis Report
Martin Marietta Materials, Inc. (MLM) : Free Stock Analysis Report
United Rentals, Inc. (URI) : Free Stock Analysis Report
Dycom Industries, Inc. (DY) : Free Stock Analysis Report
Construction Partners, Inc. (ROAD) : Free Stock Analysis Report
