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We are retaining our Outperform recommendation on fabricated metal products maker Valmont Industries (VMI - Analyst Report) following its healthy third-quarter 2012 results. Earnings of $2.12 per share comfortably beat the Zacks Consensus Estimate of $2.06. Profit jumped nearly 35% year over year, boosted by a solid performance in the Nebraska-based company’s Utility Support Structures division.

Revenues jumped roughly 9% year over year to $729.8 million, supported by growth across the board. However, it missed the Zacks Consensus Estimate of $739 million. Revenues from the Utility Support Structures segment surged 36% year over year, buoyed by higher demand from electric utility companies.

Moving ahead, Valmont expects continued strength in its utility business in the remainder of 2012. It also expects healthy demand for irrigation equipments from farmers in the fourth quarter.

Valmont, which competes with Lindsay Corporation (LNN - Analyst Report), is witnessing significant strength across the utility and irrigation markets. The outlook for irrigation equipment is healthy while demand for utility support structures is expected to rise. The company expects to post double-digit earnings growth this year despite the European slowdown.

Valmont’s Irrigation and Coatings segments are witnessing healthy momentum recently. In the Irrigation segment, improving North American equipment demand amid the ongoing drought conditions and higher farm income is boosting sales and profitability. The Coatings segment is benefiting from moderating zinc prices.

The company is also poised to savor incremental opportunity in the utility market. The global transmission and distribution markets are seen as major long-term growth opportunities.

Valmont is actively pursuing capacity expansion through new constructions and extension of existing facilities to meet the increasing demand from utility customers in North America. Moreover, it remains committed to returning value to its shareholders in the form of regular dividend payouts.

However, the company’s core Engineered Infrastructure Products segment remains challenged by the soft market conditions in Europe. Nevertheless, the passage of a two year highway bill and improvement across the wireless communications and commercial lighting markets represents positives for this business.  

Our recommendation on the stock is in sync with a short-term Zacks #2 Rank (Buy).

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