Vulcan Materials Company
) is set to report second-quarter 2014 results on Aug 5, before the
opening bell. Last quarter, the company delivered a positive
earnings surprise of 17.65%.
In fact, this construction aggregates producer posted positive
earnings surprise in three of the past four quarters with an
average beat of 92.96% due to a rebound in its aggregates
Let's see how things are shaping up for this announcement.
Factors to Consider This Quarter
After witnessing a sharp increase in aggregates demand in the
second half of 2013, difficult weather conditions slowed down
volume trends for the company in the first quarter of 2014.
Moreover, disruptions in production and shipping days led to
increased costs which, coupled with unfavorable geographic mix,
weighed on margins.
However, management expects volumes to pick up in the second
quarter. Management expects to recover the first-quarter shipment
delays in the second quarter as the construction season sets
Overall, management has an optimistic outlook for the second
half. Management expects aggregates volume to increase 4-7% in 2014
and aggregates prices to increase 3-5%. Private construction is
expected to continue to lead volume growth in 2014.
Additionally, large projects, including both public
infrastructure and private industrial projects are expected to
contribute modestly to volume growth. Vulcan Materials expects
aggregates segment margins to improve further in the second half
driven by volume and pricing growth as well as solid cost control
and operating efficiencies from profit enhancement initiatives.
However, limited visibility on aggregates demand growth in
public construction and uncertainty surrounding September
expiration of the current highway bill are the overhangs.
Our proven model does not conclusively show that Vulcan
Materials is likely to beat earnings this quarter. That is because
a stock needs to have both a positive
and a Zacks Rank #1, 2 or 3 for this to happen. That is not the
case here, as you will see below.
The Earnings ESP is 0.00%.
Vulcan Materials' Zacks Rank #3 (Hold) when combined with a 0.00%
ESP, makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Other stocks in building/construction sector that have both a
positive Earnings ESP and a favorable Zacks Rank are:
United Rentals, Inc. (
),with an Earnings ESP of 2.38% and a Zacks Rank #2 (Buy).
CEMEX, S.A.B. de C.V. (
), with an Earnings ESP of +100.0% and a Zacks Rank #3 (Hold).
Masco Corp. (
), with an Earnings ESP of +3.13% and a Zacks Rank #3.
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VULCAN MATLS CO (VMC): Free Stock Analysis
CEMEX SA ADR (CX): Free Stock Analysis Report
MASCO (MAS): Free Stock Analysis Report
UTD RENTALS INC (URI): Free Stock Analysis
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