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Is a Beat in Store for Vulcan Materials (VMC) in Q4 Earnings?

Zacks

Vulcan Materials Company VMC is set to release fourth-quarter 2017 results on Feb 16, before the opening bell.

Last quarter, the company delivered a positive earnings surprise of 16.87%. Notably, the company surpassed the Zacks Consensus Estimate in two of the last four quarters, the average earnings beat being 5.23%.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

Vulcan Material’s systematic inorganic strategy for expansion looks encouraging. The company has wrapped up various bolt-on acquisitions that contributed significantly to its growth. In the first nine months of 2017, it closed acquisitions worth $212.4 million. These include ready-mixed concrete facilities, an aggregates marine distribution yard and building materials yards from California, two aggregates facilities from Illinois, an aggregates facility from New Mexico as well as two aggregates facilities, asphalt mix operations and a construction-paving business from Tennessee. These buyouts are expected to drive growth in the to-be-reported quarter.

Coming to the segments, Aggregates segment sales (accounting for more than 78% of total revenues) will rise 6.8% in the quarter, per the Zacks Consensus Estimate. Last quarter, segment sales increased 4.5% year over year. The Zacks Consensus Estimate for aggregates shipments is pegged at 44.3 billion tons, showing an improvement of 2.8% year over year.

In the previous quarter, Asphalt Mix segment revenues improved 20.6% year over year . In the fourth quarter, revenues are expected to grow 6.5% year over year, per the Zacks Consensus Estimate. Concrete segment revenues are projected to rise 16.8% in the to-be-reported quarter. Revenues increased 26.8% in the last quarter. Also, Calcium segment revenues are likely to be down 3.4% in the to-be-reported quarter. Revenues declined 14.7% in the prior quarter.

Moreover, an improvement in private construction activities, especially private residential construction, bodes well. As a result, demand for Vulcan Materials’ products is likely to rise, which will drive revenues.

However, seasonal influences on construction activity can weigh on the company’s performance in the to-be-reported quarter. Vulcan Materials is susceptible to bad weather conditions as most of its products are used outdoors in the public or private construction industry. Also, the company’s production and distribution facilities are located outdoors.

For the fourth quarter, the Zacks Consensus Estimate for revenues is pegged at $936.5 million, up 7.3% year over year. Earnings are estimated at 72 cents, reflecting year-over-year increase of 4.4% year.

Quantitative Model Prediction

Per our proven model, Vulcan Materials is likely to deliver an earnings beat in the to-be-reported quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

Zacks ESP: The Earnings ESP is +1.17%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Vulcan has a Zacks Rank #2, which increases the odd of an earnings beat.

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

Vulcan Materials Company Price and EPS Surprise

Vulcan Materials Company Price and EPS Surprise | Vulcan Materials Company Quote


Other Stocks with Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat.

Boise Cascade Company BCC has an Earnings ESP of +15.79% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Century Communities. CCS has an Earnings ESP of +7.32% and a Zacks Rank #1.

MasTec MTZ has an Earnings ESP of +3.10% and a Zacks Rank #2.

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