Back to top

Analyst Blog

Vulcan Materials Company (VMC - Analyst Report) is set to report its first-quarter 2013 results on May 2 before the market opens. Last quarter, it posted an 81.8% negative surprise. Let’s see how things are shaping up for this announcement.

Factors to Consider This Quarter

Vulcan’s overall results in 2012 have been significantly hurt due to volume declines in its flagship aggregates business. However, recently, aggregates demand is growing in the private construction market. Management is expecting solid growth in aggregates demand in 2013 as private construction demand is expected to continue rising. Aggregates shipments are expected to grow in the range of 1%-5% in 2013. However, volume growth will be weighed more toward the second half of the year due to difficult weather comparisons in the first quarter. The first quarter of 2012 benefitted significantly from favorable weather conditions.

Moreover, the company has limited visibility on growth in the demand for aggregates in public construction, including highways and other infrastructure projects. Though, the number of large highway and industrial projects are expected to grow with increased funding certainty from the new highway bill, the timing of these projects is difficult to predict.

Accordingly, the volumes might still be sluggish in the first quarter of 2013 (due to difficult year ago comparisons) which could continue to hurt the top line. However, profits may show some improvement as a result of Vulcan’s cost reduction initiatives and price increases.

Earnings Whispers?

Our proven model does not conclusively show that Vulcan is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here, as you will see below.

Negative Zacks ESP:  The Earnings ESP is -10.81%.  

Zacks Rank #3(Hold): Vulcan’s Zacks Rank #3 (Hold) lowers the predictive power of ESP because the Zacks Rank #3 when combined with a negative ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some building materials/ housing companies you may want to consider, as our model shows they have the right combination of elements to post an earnings beat in the next quarter:  

TexasIndustries Inc , with an Earnings ESP of +67.74% and a Zacks Rank #2 (Buy)

Ryland Group Inc. (RYL - Snapshot Report), with an Earnings ESP of +25.93% and a Zacks Rank #1 (Strong Buy)

PulteGroup, Inc. (PHM - Analyst Report), with an Earnings ESP of +25.0% and a Zacks Rank #2 (Buy)

 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
CENTURY ALU… CENX 22.53 +4.50%
ERBA DIAGNO… ERB 2.91 +4.30%
PLANAR SYST… PLNR 4.31 +3.86%
MALLINCKROD… MNK 72.17 +3.83%
GTT COMMUNI… GTT 12.06 +3.52%