Back to top

Image: Shutterstock

Will Planned Dry Dockings Ail Great Lakes (GLDD) Q2 Earnings?

Read MoreHide Full Article

Great Lakes Dredge & Dock Corporation (GLDD - Free Report) is expected to have generated lower earnings and revenues in second-quarter 2020.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate of $17 by 205.9% and increased 62.5% year over year. Also, contract revenues improved 13% from the prior-year period.

This largest provider of dredging services in the United States has a strong surprise history, having surpassed the Zacks Consensus Estimate in the trailing 10 quarters.

Trend in Estimate Revision

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has been stable at 13 cents over the past 60 days. This indicates a decline of 27.8% from the year-ago quarter. The consensus mark for revenues is pegged at $161 million, suggesting a 12.9% year-over-year decrease.

Factors to Note

Great Lakes is likely to have registered year-over-year lower revenues in the second quarter. The company planned dry dockings of certain vessels beginning in the second quarter, which is likely to have impacted the top line. Also, it has been witnessing a decrease in domestic capital, rivers and lakes, and foreign dredging revenues.

The company’s business depends on federal government dredging and other contracts, and therefore, is highly volatile. Although it did not foresee any adverse impact of the pandemic on businesses, the company might have experienced project delays and timing issues in the second quarter. Notably, the dredging industry has been carrying out operations as it has been listed as an essential critical infrastructure service provider.

The company’s focus on successful execution and completion of projects that are critical to maintaining as well as deepening the nation's maritime infrastructure, and protecting coastlines will likely reflect in second-quarter results. Importantly, the U.S. Army Corps of Engineers — which oversees the majority of these infrastructure projects — has not been delaying the same as much as others.

Overall, strong domestic dredging operations, high equipment utilization, solid project execution and savings from restructuring are likely to have aided the company to some extent to mitigate the above-mentioned headwinds.

That said, increase in G&A expense owing to higher incentive compensation is expected to have impacted margins. Also, divestiture of the Environmental & Infrastructure or E&I business (completed last year) is expected to have been a concern.

Quantitative Model Prediction

Our proven model does not conclusively predict an earnings beat for Great Lakes this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here as elaborated below.

Earnings ESP: Great Lakes has an earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: It currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Worth a Look

Here are some stocks worth considering in the Zacks Construction sector as our model shows that these have the right combination of elements to beat on earnings in the upcoming releases.

TopBuild Corp. (BLD - Free Report) has an Earnings ESP of +29.11% and a Zacks Rank of 1 at present.

Owens Corning (OC - Free Report) has an Earnings ESP of +47.78% and a Zacks Rank of 3, presently.

Weyerhaeuser Company (WY - Free Report) has an Earnings ESP of +125.01% and a Zacks Rank #3, currently.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>

Published in