Reaffirming Valmont at Neutral - Analyst Blog

By
A A A

On Dec 5, we reiterated our Neutral recommendation on steel pipe and tube company Valmont Industries, Inc. ( VMI ). While the company should gain from strong demand environment across utility and irrigation markets, we take a cautious stance factoring in weakness across lighting and traffic markets in North America and a still challenging operating backdrop in Europe. 

Why Retained?

Valmont posted lower-than-expected third-quarter 2013 results on Oct 17 with both revenues and adjusted earnings missing Zacks Consensus Estimates. Profit was essentially flat year over year as higher sales were offset by an increase in tax expenses. The company envisions sustained improvement in utility support and engineered infrastructure support businesses. 

Valmont, a Zacks Rank #3 (Hold) stock, is witnessing significant strength across the utility and irrigation markets. In the Irrigation segment, improving North American equipment demand and higher farm income is boosting sales and profitability. Moreover, the global transmission and distribution markets are seen as major long-term growth opportunities in the utility market.

In addition, Valmont is actively pursuing capacity expansion through new constructions and extension of existing facilities to meet the increasing demand from utility customers in North America. 

However, Valmont remains affected by a challenging operating backdrop in Europe. In its Engineered Infrastructure Products division, weak government infrastructural funding is hurting lighting and traffic product markets across North America and Europe. 

Valmont is also exposed to volatility in raw material costs. Higher prices for key raw materials such as steel, aluminum and zinc, along with their reduced availability, may raise the company's operating costs and reduce its profitability. 

Other Stocks to Consider

Other companies in the steel and related industries with favorable Zacks Rank are Companhia Siderurgica Nacional ( SID ), United States Steel Corp. ( X ) and Worthington Industries, Inc. ( WOR ). While Companhia Siderurgica maintains a Zacks Rank #1 (Strong Buy), both United States Steel and Worthington Industries hold a Zacks Rank #2 (Buy).



CIA SIDERUR-ADR (SID): Free Stock Analysis Report

VALMONT INDS (VMI): Free Stock Analysis Report


WORTHINGTON IND (WOR): Free Stock Analysis Report

UTD STATES STL (X): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: SID , VMI , WOR , X

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

FordLoop8.Mov
FordLoop8.Mov                       

Stocks

Referenced

89%
100%
100%
79%

Most Active by Volume

122,762,267
  • $15.81 ▼ 1.43%
62,277,320
  • $8.50 ▼ 6.80%
58,664,622
  • $128.46 ▼ 1.50%
48,473,163
  • $25.99 ▲ 0.39%
36,433,239
  • $5.12 ▲ 7.34%
35,593,669
  • $6.63 ▲ 5.41%
30,823,989
  • $16.68 ▼ 3.02%
30,676,302
    $2.08 unch
As of 2/27/2015, 04:15 PM


Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com