Vulcan Materials (VMC) Q4 Earnings: What's in the Cards?

Vulcan Materials CompanyVMC is scheduled to release fourth-quarter 2016 financial numbers, before the opening bell on Feb 7.

In the last reported quarter, the company had posted a negative 9.8% earnings surprise. Notably, the company surpassed the Zacks Consensus Estimate in two of the last four quarters, with an average earnings beat of 83.9%.

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

Factors at Play

Vulcan is the largest producer of construction aggregates in the U.S., possessing the largest proven and probable reserve base in the country. The company supplies aggregates for production of its own asphalt mix and ready-mix concrete. Most importantly, the aggregates industry is characterized by high barriers to entry as there are limited substitutes for quality aggregates, thus placing Vulcan favorably.

Sustained growth in private construction activity drives demand for both the aggregates and non-aggregates businesses of Vulcan. Residential housing starts as well as non-residential contract awards improved steadily in the first nine months of 2016, driven by job growth and general economic recovery. The trend can be expected to continue in the fourth quarter.

In the third-quarter earnings call, the company had forewarned that fourth-quarter results could be impacted significantly by weather and the effective length of the construction season, with its strong prior-year quarter results presenting tough comparisons.

Also, the company expects $1 billion of adjusted EBITDA for fiscal year 2016, higher than $836 million reported in the prior year quarter.

Meanwhile, for the fourth quarter, the Zacks Consensus Estimate for earnings is pegged at 83 cents a share, reflecting an increase of 12.5% year over year, while the consensus for revenues is at $914.6 million, implying 6.7% year-over-year growth.

Earnings Whispers

Our proven model does not conclusively show that Vulcan is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Vulcan has an Earnings ESP of 0.00%. That is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 83 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Vulcan Materials Company Price and EPS Surprise

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

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

Stocks to Consider

Here are some companies in the broader construction sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat this quarter:

AECOM ACM , with an Earnings ESP of +1.89% and a Zacks Rank #2, is scheduled to report its first quarter fiscal 2017 results on Feb 7 .You can see the complete list of today's Zacks #1 Rank stocks here .

Chicago Bridge & Iron Company N.V. CBI , with an Earnings ESP of +3.45% and a Zacks Rank #2.

Century Communities, Inc. CCS , with an Earnings ESP of +14.93% and a Zacks Rank #2.

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

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

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