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Construction Stocks’ Q1 Earnings Slated for Apr 19: URI, CBI

Zacks

The construction sector has been witnessing a number of encouraging developments of late. Positives like an improving economy, modest wage growth, low unemployment levels, positive consumer confidence and a tight supply situation raise optimism over the sector’s performance.

The positive momentum is evident from the improvement in the sector’s Zacks rank. It currently carries a Zacks Rank #2 (out of 16 sectors), reflecting four positive and one negative revision.

Several recent statistics regarding the construction sector raise optimism as well. Construction spending, including private and public sector, increased in Feb 2017 both on a monthly as well as on a year-over-year basis.

Also, the housing/homebuilding industry has been riding high on solid new home sales data, affordable interest/mortgage rates and impressive housing starts. Resilient job growth and a healthy demand-supply balance along with seemingly high homebuilders’ confidence are adding to the momentum. Meanwhile, the rise in mortgage rates seems to be having a minimal effect on the industry.

So far, some of the leading companies in the construction sector have reported their quarterly results. Lennar Corporation’s LEN first-quarter 2017 adjusted earnings beat the Zacks Consensus Estimate by 5.4% while total revenue surpassed the mark by 6.4%. KB Home KBH exhibited an impressive performance in the first quarter of fiscal 2017, with earnings and revenues beating the Zacks Consensus Estimate by 7.1% and 2.1%, respectively.

Let us take a look at how these two construction companies are placed ahead of their earnings release on Apr 19.

Headquartered in Stamford, CT, United Rentals, Inc. URI is one of North America's largest equipment rental companies with branches in majority of the states and Canadian provinces. The company is scheduled to report first-quarter earnings, after market close.

Last quarter, the company posted a positive earnings surprise of 16.1%. It surpassed estimates in all of the past four quarters and has an average positive surprise of 12.75%.

United Rentals, Inc. Price and EPS Surprise

Our proven model shows that United Rentals is likely to beat earnings because it has the perfect combination of an Earnings ESP of +3.27% (Most Accurate estimate stands at $1.58 and Zacks Consensus Estimate at $1.53) and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

For the first quarter, the Zacks Consensus Estimate for earnings is pegged at $1.53, reflecting a 9.5% year-over-year increase. Meanwhile, our estimate for revenues is pegged at $1.33 billion, implying a 1.4% increase.

Chicago Bridge & Iron Company N.V. CBI designs, builds, repairs and modifies steel tanks, other steel plate structures and associated systems.

Last quarter, the company posted a negative earnings surprise of 42.6%. Meanwhile, it missed estimates in three out of the past four quarters and has an average negative surprise of 13.88%.

Our proven model does not conclusively show a beat for Chicago Bridge & Iron in the first quarter of 2017 as it has a Zacks Rank #5 (Strong Sell) and an Earnings ESP of 0.00% (Most Accurate estimate and Zacks Consensus Estimate are pegged at 95 cents). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Chicago Bridge & Iron Company N.V. Price and EPS Surprise


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 first quarter, the Zacks Consensus Estimate for earnings is pegged at 95 cents, reflecting a 5.7% year-over-year decrease. Meanwhile, our estimate for revenues is pegged at $2.44 billion, implying an 8.4% decline.

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