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Will Vulcan Materials See Better Aggregates Volume in 2H16?
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We issued an updated research report on Vulcan Materials Company (VMC - Free Report) on Aug 29, 2016.
After a strong first quarter performance, Vulcan Materials reported softer second-quarter results.
Vulcan Materials missed the Zacks Consensus Estimate for both earnings and sales in the second quarter of 2016. While profits were strong, sales slowed down in the quarter.
With improvement in the economy and job scenario, non-residential construction and housing strengthened in 2016. Both demand and pricing momentum remained strong in the first half of 2016 and the trend is expected to continue in the second half.
Nonetheless, though demand trends remained strong in the second quarter, aggregates shipments (volumes) increased 3% year over year, much less than 17% in the first quarter.
Shipments in the quarter were hurt by an extremely wet weather in several key markets and slower-than-expected start to large projects, both public and private. Shipments fell 5% in the month of May, while it rose approximately 8% and 6% in April and June, respectively. Management believes some project work was pulled forward to the first quarter.
The company said it is yet to see much benefit in terms of shipments from rising public funding for transportation and other infrastructure on the strength of the FAST Act along with key state and local-level transportation funding measures. Management anticipates public construction activity to pick up in 2017.
Though the company maintained its aggregates 2016 shipment guidance, it cautioned that achieving the plan will require favorable weather in the second half and ramping of large infrastructure project work. As it is, unfavorable weather conditions usually shorten the construction season in the fourth quarter, which can hurt volume trends.
Additionally, construction labor shortages and other bottlenecks are partly affecting demand growth.
Vulcan Materials carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector are Trex Company, Inc. (TREX - Free Report) , Gibraltar Industries, Inc. (ROCK - Free Report) and United Rentals, Inc. (URI - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy).
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Will Vulcan Materials See Better Aggregates Volume in 2H16?
We issued an updated research report on Vulcan Materials Company (VMC - Free Report) on Aug 29, 2016.
After a strong first quarter performance, Vulcan Materials reported softer second-quarter results.
Vulcan Materials missed the Zacks Consensus Estimate for both earnings and sales in the second quarter of 2016. While profits were strong, sales slowed down in the quarter.
VULCAN MATLS CO Price and Consensus
VULCAN MATLS CO Price and Consensus | VULCAN MATLS CO Quote
With improvement in the economy and job scenario, non-residential construction and housing strengthened in 2016. Both demand and pricing momentum remained strong in the first half of 2016 and the trend is expected to continue in the second half.
Nonetheless, though demand trends remained strong in the second quarter, aggregates shipments (volumes) increased 3% year over year, much less than 17% in the first quarter.
Shipments in the quarter were hurt by an extremely wet weather in several key markets and slower-than-expected start to large projects, both public and private. Shipments fell 5% in the month of May, while it rose approximately 8% and 6% in April and June, respectively. Management believes some project work was pulled forward to the first quarter.
The company said it is yet to see much benefit in terms of shipments from rising public funding for transportation and other infrastructure on the strength of the FAST Act along with key state and local-level transportation funding measures. Management anticipates public construction activity to pick up in 2017.
Though the company maintained its aggregates 2016 shipment guidance, it cautioned that achieving the plan will require favorable weather in the second half and ramping of large infrastructure project work. As it is, unfavorable weather conditions usually shorten the construction season in the fourth quarter, which can hurt volume trends.
Additionally, construction labor shortages and other bottlenecks are partly affecting demand growth.
Vulcan Materials carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector are Trex Company, Inc. (TREX - Free Report) , Gibraltar Industries, Inc. (ROCK - Free Report) and United Rentals, Inc. (URI - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy).
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>