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Construction Stocks’ Q4 Earnings on Feb 17: FLR, GVA, ROCK


The Q4 earnings season has so far seen quarterly releases from 84.6% of the construction companies in the S&P 500 cohort. According to the latest Earnings Outlook, 54.5% of the companies have surpassed earnings estimates while 63.6% beat revenue expectations. Total earnings at these construction companies increased 8.7% and total revenues rose 6.8%.

As the U.S. homebuilding market staged a striking comeback in Dec 2016, it is likely that the housing market may have contributed to economic growth in the fourth quarter. Positives like a healthier economy, improving employment levels, positive consumer confidence and a tight supply situation raise optimism about the sector’s performance in 2017.

So far, some of the leading companies in the construction sector have reported their Q4 results. Masco Corporation’s MAS reported fourth-quarter 2016 numbers wherein earnings missed analysts’ expectations by 2.9% and revenues surpassed estimates by 0.6%. Vulcan Materials Company’s VMC fourth-quarter 2016 adjusted earnings and revenue missed the Zacks Consensus Estimate by 16.8% and 4.6% respectively.

Let us take a look at how these three construction companies are placed ahead of their fourth-quarter 2016 earnings release on Feb 17.

Fluor Corporation FLR, a FORTUNE 500 company that delivers engineering, procurement, construction, maintenance and project management, is scheduled to report before the opening bell.

In its preliminary fourth-quarter results declared on Feb 10, the company expects to report fourth-quarter net profit from continuing operations of $70 million or 50 cents per share (including the adverse tax effects). Excluding the adverse tax effects, the company expects to report a net profit from continuing operations of $115 million or 82 cents per share for the fourth quarter of 2016.

Last quarter, the company posted a positive earnings surprise of 29.9%. Meanwhile, it missed estimates in three out of the past four quarters and has an average negative surprise of 3.85%.

Our proven model shows that Fluor is likely to beat earnings because it has the perfect combination of an Earnings ESP of +2.50% and a Zacks Rank #3 (Hold).

This is because the company’s Most Accurate estimate stands at 82 cents and the Zacks Consensus Estimate is at 80 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Fluor Corporation Price and EPS Surprise

Fluor Corporation Price and EPS Surprise | Fluor Corporation Quote

Per our model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 to beat earnings.

Please note that we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

For the fourth quarter, the Zacks Consensus Estimate for earnings is pegged at 80 cents, reflecting a 17.6% year-over-year increase. Meanwhile, our estimate for revenues is pegged at $4.83 billion, implying a 10.6% increase.

Granite Construction Incorporated GVA, a heavy civil general contractor and construction material producer, is slated to report after the market closes.

Last quarter, Granite missed earnings estimates by 2.1%. The company surpassed estimates in only one of the past four quarters, with an average miss of 31.4%.

Our proven model does not conclusively show a beat for Granite as it has an Earnings ESP of 0.00% (both Most Accurate estimate and Zacks Consensus Estimate are at 53 cents) and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Granite Construction Incorporated Price and EPS Surprise

The Zacks Consensus Estimate for the quarter’s earnings is pegged at 53 cents, down 26.4% year over year. The consensus for revenues is at $689.06 million, implying 9.4% year-over-year growth.

Gibraltar Industries, Inc. ROCK, a leading manufacturer, processor, and distributor of metals and other engineered materials, is slated to report before market opens.

In the preceding quarter, the company posted a positive earnings surprise of 10%. The company surpassed earnings in all of the preceding four quarters, with an average beat of 67.3%.

Gibraltar has an Earnings ESP of 0.00%. That is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 25 cents.

Also, Gibraltar has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

Gibraltar Industries, Inc. Price and EPS Surprise

For the fourth quarter, the Zacks Consensus Estimate for earnings is pegged at 25 cents, reflecting a decline of 13.8% year over year, while the consensus for revenues is at $229.67 million, indicating an 18.6% year-over-year decline.

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