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Can Vulcan Materials' Buyout Spree Continue to Boost Growth?
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Acquisitions have been integral to Vulcan Materials’ (VMC - Free Report) growth strategy. After its conversion into a public company in 1957, the company has ever since wrapped up various bolt-on acquisitions, which contributed significantly to its growth.
In 2017, Vulcan closed a series of acquisitions totaling $226 million. These buyouts include ready-mixed concrete facilities, an aggregates marine distribution yard and building materials yards in California, an aggregates rail distribution yard in Florida and another in South Carolina, three aggregates facilities and 14 aggregates rail distribution yards in Georgia and an asphalt mix operations as well as a construction paving business in Tennessee.
In the beginning of 2018, the company made an important integration of Aggregates USA, LLC for $900 million into its portfolio. With this addition, Vulcan will serve high-growth markets across the Southeastern United States comprising states of Georgia, Florida, Tennessee, South Carolina and Virginia.
The company will largely benefit from state highway funding programs in these areas and also from consistent private sector growth in the region. Adjusted EBITDA including the impact of Aggregates USA operations, is envisioned in the range of $1.15-$1.25 billion. Aggregates shipments from Aggregates USA operations are expected to be roughly 7 million tons.
These buyouts boost Vulcan's ability to serve customers well and draw in operational and commercial synergies.
Meanwhile, the company also resorts to divesting its assets from time to time. In 2017, Vulcan swapped ready-mixed concrete operations in Arizona for an asphalt mix operation in the same place, thus resulting in a pretax gain of $8.02 million. Also, as required by the Department of Justice, the company immediately divested certain assets obtained in the Aggregates USA acquisition. It sold 17 Aggregates USA quarries and other facilities in Tennessee and Virginia to Blue Water Industries LLC for $290 million. Vulcan also sold 13 active quarries and yards plus four inactive quarries.
The company’s plans for the rest of 2018 will be to completely capture the synergies derived from the recent consolidations and continue with its disciplined strategy of pursuing bolt-on acquisitions. Also, it will remain focused on building Aggregates’ units margins and executing internal growth projects. Notably, Vulcan expects earnings from continuing operations between $4 and $4.65 per share, a growth of 40% over 2017’s adjusted EPS.
Share Price Movement
Vulcan Materials’ shares have gained 1.8% in the past year, comparing favorably with the industry’s loss of 4.9%. Also, earnings estimates for the current year and the next have moved 9.9% and 10.3% north, respectively, over the last two months. This upside in turn reflects analysts’ optimism on the stock’s prospects.
M.D.C. Holdings’ 2018 earnings are expected to increase 15.9% while that of Lyon William is likely to surge 38%.
Meritage Homes is expected to witness 30.4% growth in 2018 earnings.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Can Vulcan Materials' Buyout Spree Continue to Boost Growth?
Acquisitions have been integral to Vulcan Materials’ (VMC - Free Report) growth strategy. After its conversion into a public company in 1957, the company has ever since wrapped up various bolt-on acquisitions, which contributed significantly to its growth.
In 2017, Vulcan closed a series of acquisitions totaling $226 million. These buyouts include ready-mixed concrete facilities, an aggregates marine distribution yard and building materials yards in California, an aggregates rail distribution yard in Florida and another in South Carolina, three aggregates facilities and 14 aggregates rail distribution yards in Georgia and an asphalt mix operations as well as a construction paving business in Tennessee.
In the beginning of 2018, the company made an important integration of Aggregates USA, LLC for $900 million into its portfolio. With this addition, Vulcan will serve high-growth markets across the Southeastern United States comprising states of Georgia, Florida, Tennessee, South Carolina and Virginia.
The company will largely benefit from state highway funding programs in these areas and also from consistent private sector growth in the region. Adjusted EBITDA including the impact of Aggregates USA operations, is envisioned in the range of $1.15-$1.25 billion. Aggregates shipments from Aggregates USA operations are expected to be roughly 7 million tons.
These buyouts boost Vulcan's ability to serve customers well and draw in operational and commercial synergies.
Meanwhile, the company also resorts to divesting its assets from time to time. In 2017, Vulcan swapped ready-mixed concrete operations in Arizona for an asphalt mix operation in the same place, thus resulting in a pretax gain of $8.02 million. Also, as required by the Department of Justice, the company immediately divested certain assets obtained in the Aggregates USA acquisition. It sold 17 Aggregates USA quarries and other facilities in Tennessee and Virginia to Blue Water Industries LLC for $290 million. Vulcan also sold 13 active quarries and yards plus four inactive quarries.
The company’s plans for the rest of 2018 will be to completely capture the synergies derived from the recent consolidations and continue with its disciplined strategy of pursuing bolt-on acquisitions. Also, it will remain focused on building Aggregates’ units margins and executing internal growth projects. Notably, Vulcan expects earnings from continuing operations between $4 and $4.65 per share, a growth of 40% over 2017’s adjusted EPS.
Share Price Movement
Vulcan Materials’ shares have gained 1.8% in the past year, comparing favorably with the industry’s loss of 4.9%. Also, earnings estimates for the current year and the next have moved 9.9% and 10.3% north, respectively, over the last two months. This upside in turn reflects analysts’ optimism on the stock’s prospects.
Zacks Rank & Stocks to Consider
Vulcan carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the Construction sector are M.D.C. Holdings, Inc. , Lyon William Homes and Meritage Homes Corporation (MTH - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
M.D.C. Holdings’ 2018 earnings are expected to increase 15.9% while that of Lyon William is likely to surge 38%.
Meritage Homes is expected to witness 30.4% growth in 2018 earnings.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>