Vulcan Upped to Outperform - Analyst Blog

By Zacks Equity Research,

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On Jan 9, we upped our recommendation on Vulcan Materials Company ( VMC ) from Neutral to Outperform based on strong third-quarter 2013 results.

Why Retention?

Vulcan announced impressive third-quarter results on Nov 4. Third-quarter adjusted earnings of 32 cents per share surpassed the Zacks Consensus Estimate by 28%. Earnings per share improved significantly from the prior-year quarter on the back of solid revenue increase in most of the segments.

Total revenue also beat the Zacks Consensus Estimate and increased 11.6% from the prior-year quarter owing to pricing gains and volume growth. The growth was driven by improved product demand owing to broad based recovery in private construction activity, especially residential. Improved demand also favored pricing across most of its markets. Gross profit and adjusted EBITDA also grew strongly driven by strong top line and solid cost control.

Additionally, most of the volume and pricing increase was noted in the aggregates segment which was sluggish in the past few quarters. Management is seeing improving trends in aggregates' requirement as private construction demand is growing with the recovery in the overall housing industry. The demand for highway construction is also expected to grow gradually with increased funding certainty from the new highway bill and an expanded Transportation Infrastructure Finance and Innovation Act program.

Many favorable-ranked stocks in the building materials/home improvement sector include Masco Corporation ( MAS ), James Hardie Industries plc ( JHX ) and United Rentals, Inc. ( URI ). While James Hardie sports a Zacks Rank #1 (Strong Buy), Masco and United Rentals carry a Zacks Rank #2 (Buy).

JAMES HARDI-ADR (JHX): Free Stock Analysis Report

MASCO (MAS): Free Stock Analysis Report

UTD RENTALS INC (URI): Free Stock Analysis Report

VULCAN MATLS CO (VMC): Free Stock Analysis Report

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Zacks Investment Research

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

This article appears in: Investing , Business , Stocks
Referenced Stocks: JHX , MAS , URI , VMC

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