Valmont Industries, Inc

Valmont Industries, Inc (VMI - Analyst Report) is coming off of a record-setting quarter for sales, net income, and operating income. A world-wide demand and excellent cost management have propelled the company to its record levels. The acquisitions from earlier this year are making significant contributions for the Zacks #1 rated stock.

Company Description

Valmont Industries, Inc designs and manufactures a variety of metallic structures including street lights, wireless towers, and irrigation systems. The company also provides protective coating services. Valmont is headquartered in Omaha, Nebraska, but has operations world wide. The company carries a market cap of $2.6 billion.

A Record Quarter

Valmont announced second-quarter results on July 18th, including record Net Income of $1.41, a 38% year-over-year increase from $1.03. Analysts were only expecting earnings of $1.34 per share, yielding a 5.5% surprise. This was the fourth earnings surprise in as many quarters, with an average surprise of 13.3%

The company also set a quarterly sales record of $497.1 million compared to $402.3 million in second quarter last year.

The excellent quarterly results are being attributed to an international increase in demand for irrigation equipment, up 48% year-over-year. However, the company's three remaining segments also saw an increase in sales. Most notably Engineered Support Structures, which accounted for 38% of total sales, after a 19% increase from the second quarter of last year.

Hedging Inflation

Valmont also saw an increase in Operating Income of 1.6%, now 12.7% of total revenue. The company has been able to effectively manage an unprecedented rise in steel prices, which represent approximately 35% of the companies cost of goods sold.

Acquisitions are Paying Off

On February 6th, Valmont announced the acquisition of 70% of West Coast Engineering Group, which is currently being incorporated into Valmont's operations. West Coast, which has annual revenue of over $40 million, made a significant contribution to the quarterly sales increase shown by the Engineered Supports Structures Segment.

The acquisition of PennSummit, also announced earlier this year, was the driver for the Utility Support Structures Segment, which saw sales jump 13%, compared to one year ago.

The Chart

Shares of VMI jumped on after the second-quarter announcement and could be establishing a new level of support at $100 per share. Take a look at the chart below.