We are retaining our Outperform recommendation on fabricated
metal products maker
) following its healthy third-quarter 2012 results. Earnings of
$2.12 per share comfortably beat the Zacks Consensus Estimate of
$2.06. Profit jumped nearly 35% year over year, boosted by a
solid performance in the Nebraska-based company's Utility Support
Revenues jumped roughly 9% year over year to $729.8 million,
supported by growth across the board. However, it missed the
Zacks Consensus Estimate of $739 million. Revenues from the
Utility Support Structures segment surged 36% year over year,
buoyed by higher demand from electric utility companies.
Moving ahead, Valmont expects continued strength in its utility
business in the remainder of 2012. It also expects healthy demand
for irrigation equipments from farmers in the fourth quarter.
Valmont, which competes with
), is witnessing significant strength across the utility and
irrigation markets. The outlook for irrigation equipment is
healthy while demand for utility support structures is expected
to rise. The company expects to post double-digit earnings growth
this year despite the European slowdown.
Valmont's Irrigation and Coatings segments are witnessing healthy
momentum recently. In the Irrigation segment, improving North
American equipment demand amid the ongoing drought conditions and
higher farm income is boosting sales and profitability. The
Coatings segment is benefiting from moderating zinc prices.
The company is also poised to savor incremental opportunity in
the utility market. The global transmission and distribution
markets are seen as major long-term growth opportunities.
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.
Moreover, it remains committed to returning value to its
shareholders in the form of regular dividend payouts.
However, the company's core Engineered Infrastructure Products
segment remains challenged by the soft market conditions in
Europe. Nevertheless, the passage of a two year highway bill and
improvement across the wireless communications and commercial
lighting markets represents positives for this business.
Our recommendation on the stock is in sync with a short-term
Zacks #2 Rank (Buy).
LINDSAY CORP (LNN): Free Stock Analysis
VALMONT INDS (VMI): Free Stock Analysis
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