A month has gone by since the last earnings report for Valmont Industries (VMI). Shares have added about 4.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Valmont due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Valmont's Earnings and Revenues Surpass Estimates in Q3
Valmont’s reported a third-quarter 2024 profit of $83 million or $4.11 per share. This compares favorably to a loss of $49 million or $2.34 per share in the year-ago quarter. Adjusted earnings per share were $4.11, down from $4.12 in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of $3.96.
The company’s revenues were $1,020.2 million in the quarter, down 2.9% year over year. The top line beat the Zacks Consensus Estimate of $1,019.1 million.
Segment Review
The third-quarter revenues in the infrastructure segment increased roughly 0.4% over the previous year, totaling $756.4 million. It lagged our estimate of $759.3 million. The increase in utility and telecommunications sales offset the decrease in Lighting, Transportation and solar sales. Utility sales jumped approximately 15%, owing to a favorable project mix and larger volumes of distribution and substation products. Telecommunications volumes rose, owing to increasing carrier spending in a stabilized North American market.
Agriculture segment revenues totaled $263.8 million, down 11.1% year over year. It topped our estimate of $261.8 million. International sales fell year over year, with significantly reduced sales in Brazil due to normalized backlog levels and lower grain prices, which influenced growers' purchasing decisions. This fall was partially offset by revenue growth in the Europe, Middle East and Africa ("EMEA") region, as well as the contribution from the HR Products acquisition. In North America, the volume of irrigation equipment was modestly lower. A rise in replacement sales caused by severe weather occurrences earlier in 2024 was countered by ongoing agriculture market downturn amid reduced grain prices. The average irrigation selling price was similar to previous year.
Financials
The company's operating cash flows totaled $225.1 million. At the end of the third quarter, cash and cash equivalents were $200.5 million. Valmont paid $12.1 million in dividends and repurchased $40.1 million of its stock, keeping $81 million available on the approved share repurchase program. It reduced borrowings on its revolving credit facility by around $120 million this quarter, bringing the total year-to-date net reduction to roughly $210 million.
2024 Outlook
Valmont expects net sales to decline 1.5-3.5%. Earnings per share (as reported) are expected to be $16.50 to $17.30. It anticipates capital expenditures in the $85-$95 million range to support strategic growth initiatives.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Valmont has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Valmont has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Valmont Industries, Inc. (VMI) : Free Stock Analysis Report
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