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Will Acquisition Spree Boost Vulcan's (VMC) Q2 Earnings?

Vulcan Materials CompanyVMC is set to release second-quarter 2018 results on Jul 31, before the opening bell.

In the last reported quarter, the company delivered a positive earnings surprise of 100%. Notably, the company surpassed the Zacks Consensus Estimate in three of the last four quarters, the average earnings beat being 21.5%.

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

Vulcan's systematic inorganic strategy for expansion bodes well. The company strengthened its portfolio through acquisitions and divestitures that are expected to drive profits in the quarter under review. The company closed acquisitions totaling $226 million in 2017.

During the first quarter of 2018, the company closed three acquisitions, including aggregates and asphalt operations, which fortified its positions in Alabama and Texas. Importantly, the company made an important integration of Aggregates USA, LLC for $900 million into its portfolio in early 2018. These buyouts are expected to drive the upcoming quarterly results.

This apart, improvement in private construction activities, especially private residential construction, bodes well. As a result, demand for Vulcan' products is likely to rise, which will drive revenues.

Coming to the segments, the Aggregates segment sales (accounting for more than 78% of total revenues) are projected to increase 12.2%, per the Zacks Consensus Estimate. Also, in the second quarter, revenues are likely to grow 8.5% year over year in the asphalt segment, per the Zacks Consensus Estimate. Concrete segment revenues are projected to rise 13.3% in the to-be-reported quarter. Also, Calcium segment revenues are likely to be up 1.5% in the to-be-reported quarter.

Overall, for the second quarter, the Zacks Consensus Estimate for revenues is pegged at $1.16 million, indicating a rise of 12.5% year over year.

Moreover, higher revenue expectation is likely to translate into higher earnings. Earnings are estimated at $1.39, reflecting year-over-year increase of 54.4% year.

Quantitative Model Prediction

Per our proven model, Vulcan will not beat estimates in the to-be-reported quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

Earnings ESP : Earnings ESP is -6.61%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank : Vulcan has a Zacks Rank #2.

The combination of a Zacks Rank #2 and Earnings ESP of -6.61% makes us skeptical about earnings beat this quarter.

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

Vulcan Materials Company Price and EPS Surprise

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

Stocks to Consider

Here are some other companies in the same sector you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Boise Cascade BCC has an Earnings ESP of +14.97% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Louisiana-Pacific Corporation LPX has an Earnings ESP of +8.62% and a Zacks Rank #1.

Potlatch Corporation PCH has an Earnings ESP of +7.61% and a Zacks Rank #1.

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Vulcan Materials Company (VMC): Free Stock Analysis Report

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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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