Valmont Industries (VMI - Analyst Report)
is a Zacks #1 Rank (Strong Buy) following six straight positive
earnings surprises and higher earnings estimates.
Valmont Industries produces and sells fabricated metal products,
pole and tower structures, and mechanized irrigation systems in
the United States and internationally. The company's Engineered
Infrastructure Products segment offers steel and aluminum poles
and structures, to which lighting and traffic control fixtures are
attached for applications in streets, highways, parking lots,
sports stadiums, and commercial and residential developments; and
roadway safety systems, including guard rail barrier systems, wire
rope safety barriers, and crash attenuation barriers to redirect
vehicles and to prevent collisions between vehicles. Valmont
Industries, Inc. was founded in 1946 and is headquartered in
Valmont Industries Beats Expectations for Six Straight Quarters
Valmont Industries has topped the Zacks Consensus Estimate in
each of the
last six quarters. Over the course of the last six reports, The
company has produced some large beats in both percentage and
absolute terms. A $0.16 average beat over the last six quarters is
fairly impressive, and even more so when that translates into a
11.2% positive earnings surprise. On average, the beats have
produced a stock price move of 4.1% following the earnings
release. The biggest price move came after the December 2010
quarter was reported in mid-February of 2011. The 16% bottom line
surprise was good for a 14.5% move in the stock.
Its not just earnings that are beating the Zacks Consensus
Estimate, its revenues too. The revenue streak is even longer
than the earnings streak, but over the last six quarters the
company has topped expectations by an average of nearly 8%. The
December 2010 quarter which was the biggest earnings beat was
also the largest topline surprise as well, coming in 13% above the
Zacks Consensus Estimate.
Valmont Industries Recently Reported Earnings
On April 19, 2012 the company reported revenue of $717 million
approximately $43 million more than the Zacks Consensus Estimate
higher than the $568 million reported in the year ago period. EPS
of $1.96 was $0.40 higher than the Zacks Consensus estimates and a
penny short of a dollar ahead of EPS from the prior year.
the report, the stock moved higher by 4%.
Earnings Estimates Move Higher
Following the most recent earnings release, analysts have bumped
up their estimate for 2012. Prior to the release, analysts were
expecting EPS of $7.42 for Valmont Industries in 2012. The
current Zacks Consensus Estimate is calling for $8.00 a share in
EPS, indicating that the $0.40 beat was not a one-time event (that
would have resulted in the consensus moving up $0.40 or less and
instead was higher by $0.58).
Valmont Industries' valuation is worthy of a look from not only
aggressive growth investors, but value investors as well. A
trailing PE of 18x is just a point below the industry average of
19x while the forward PE of 16x is a significant premium to the 6x
industry average. Price to book of 2.6x is roughly three times
lower than the industry average of 6.3x and price to sales of
1.2x is many multiples below the industry average of 5.9x.
Overall, the valuation is very attractive.
When we look at the price and consensus chart for Valmont
see a stock that has followed the earnings estimates for most of
the last two years. The significant rise in stock price over the
last seven months has also been reflected in the earnings
estimates. What I like about this chart is the it shows how the
growth rate of earnings has really really driven the stock. The gaps between the blue line (2011 consensus) the red line (2012
consensus) and the pink line (2013) are a visual reminder that
higher earnings bring higher stock prices, and earnings are poised
to go higher. Valmont Industries is a Zacks #1 Rank (Strong Buy).
Brian Bolan is the Aggressive Growth Stock Strategist
Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor
service You can follow him at twitter.com/bbolan1