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Valmont (VMI) Up 2.16% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Valmont Industries (VMI - Free Report) . Shares have added about 2.16 % in that time frame, outperforming the market.
Will the recent positive trend continue leading up to its next earnings release, or is Valmont due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Valmont's Earnings Beat, Revenues Miss Estimates in Q2
Valmont reported profits of roughly $32.9 million or $1.46 per share in second-quarter 2018, down 27.8% from $45.7 million or $2.01, respectively, a year ago. Adjusted earnings per share in the quarter were $1.98, exceeding the Zacks Consensus Estimate of $1.94.
Net sales in the quarter totaled $682.4 million, down 4.3% year over year. The figure lagged the Zacks Consensus Estimate of $710 million. Meanwhile, an improvement in revenues was observed in the Engineered Support Structures and Coatings segments.
Review of the Segments:
Infrastructure-Related
Engineered Support Structures segment sales of $250.7 million were 5.9% higher than the prior-year quarter on improved demand for lighting and traffic structures in North America and Europe, higher highway safety product sales in Australia and India as well as favorable currency translation.
Utility Support Structures sales decreased 6.1% year over year to $197.7 million due to lower volumes attributed to a less favorable product mix in North America. Despite lower sales in offshore wind across Northern Europe, margins improved on an encouraging project mix compared to 2017.
Coatings segment recorded year-over-year net sales growth of 14.8% to $91.6 million. This was mainly driven by recovery of higher Zinc costs through pricing and increased broad-based industrial demand growth across all regions.
Agriculture-Related
Irrigation reported net sales of $162.9 million, down 13.5% year over year, affected by uncertainty of tariff and trade policies in North America and lower International compared with the previous year. Sales in North America were not comparable with second quarter of 2017. Trucker’s strike in Brazil and lower project volumes impacted segment profitability.
Financial Position
Valmont ended second-quarter 2018 with cash balance of $722.6 million, up roughly 61.2% year over year. Long-term debt at the end of the quarter was $988.5 million, up around 31%.
Outlook
The company expects adjusted earnings per share in the range of $7.55-$7.65.
Valmont remains optimistic about its markets and businesses for the rest of 2018. As a result of pricing actions and improved demand in the lighting and traffic business, Valmont anticipates favorable revenue and profit comparisons at the Engineered Support Structures segment. Results in the Irrigation segment are expected to deteriorate from last year due to challenging end-market conditions. Owing to strong industrial demand, the Coatings segment is expected to perform in line with first-half results.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Valmont has a subpar Growth Score of D, however its Momentum is doing a bit better with a C. Charting a somewhat similar path, the stock was also allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than momentum investors.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. It's no surprise VMI has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Valmont (VMI) Up 2.16% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Valmont Industries (VMI - Free Report) . Shares have added about 2.16 % in that time frame, outperforming the market.
Will the recent positive trend continue leading up to its next earnings release, or is Valmont due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Valmont's Earnings Beat, Revenues Miss Estimates in Q2
Valmont reported profits of roughly $32.9 million or $1.46 per share in second-quarter 2018, down 27.8% from $45.7 million or $2.01, respectively, a year ago. Adjusted earnings per share in the quarter were $1.98, exceeding the Zacks Consensus Estimate of $1.94.
Net sales in the quarter totaled $682.4 million, down 4.3% year over year. The figure lagged the Zacks Consensus Estimate of $710 million. Meanwhile, an improvement in revenues was observed in the Engineered Support Structures and Coatings segments.
Review of the Segments:
Infrastructure-Related
Engineered Support Structures segment sales of $250.7 million were 5.9% higher than the prior-year quarter on improved demand for lighting and traffic structures in North America and Europe, higher highway safety product sales in Australia and India as well as favorable currency translation.
Utility Support Structures sales decreased 6.1% year over year to $197.7 million due to lower volumes attributed to a less favorable product mix in North America. Despite lower sales in offshore wind across Northern Europe, margins improved on an encouraging project mix compared to 2017.
Coatings segment recorded year-over-year net sales growth of 14.8% to $91.6 million. This was mainly driven by recovery of higher Zinc costs through pricing and increased broad-based industrial demand growth across all regions.
Agriculture-Related
Irrigation reported net sales of $162.9 million, down 13.5% year over year, affected by uncertainty of tariff and trade policies in North America and lower International compared with the previous year. Sales in North America were not comparable with second quarter of 2017. Trucker’s strike in Brazil and lower project volumes impacted segment profitability.
Financial Position
Valmont ended second-quarter 2018 with cash balance of $722.6 million, up roughly 61.2% year over year. Long-term debt at the end of the quarter was $988.5 million, up around 31%.
Outlook
The company expects adjusted earnings per share in the range of $7.55-$7.65.
Valmont remains optimistic about its markets and businesses for the rest of 2018. As a result of pricing actions and improved demand in the lighting and traffic business, Valmont anticipates favorable revenue and profit comparisons at the Engineered Support Structures segment. Results in the Irrigation segment are expected to deteriorate from last year due to challenging end-market conditions. Owing to strong industrial demand, the Coatings segment is expected to perform in line with first-half results.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Valmont has a subpar Growth Score of D, however its Momentum is doing a bit better with a C. Charting a somewhat similar path, the stock was also allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than momentum investors.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. It's no surprise VMI has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.