Valmont Industries, Inc. (VMI - Free Report) entered into a multi-year supply agreement for a large agricultural development project in Africa worth $240 million. Per the deal, Valmont will provide mechanized irrigation equipment along with pump design, technology solutions and services. The deal highlights the growing global demand for reliable and efficient food production.
The 500,000-acre project will provide irrigation for highly-efficient crop production. It will substantially minimize the use of marginal agricultural land and enable double-cropping to produce world-class yields. At the same time, it will help conserve around half of the water currently used with traditional irrigation methods.
Notably, Valmont introduced the center pivot system to the U.S. market, which transformed irrigated farming. Other markets like Australia, Brazil and New Zealand have also implemented these innovative technologies.
Valmont stated that its global manufacturing footprint as well as flexible supply chain enables it to strategically serve the Africa market effectively. Project deliveries are slated to start in fourth-quarter 2020 and expected to be completed at the end of 2022.
Valmont’s shares have lost 8.7% in the past year compared with the industry’s 35.7% decline.
Valmont expects net sales of $680-700 million for third-quarter 2020. It also expects operating profit margins of 8-9% for the third quarter. Also, the company anticipates revenues from the Utility Support Structures segment to increase around 20% year over year for the third quarter.
Zacks Rank & Key Picks
Valmont currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Brenntag AG (BNTGY - Free Report) , Pretium Resources, Inc. (PVG - Free Report) and Yamana Gold Inc. (AUY - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Brenntag has an expected earnings growth rate of 2.9% for 2020. The company’s shares have surged 33% in the past year.
Pretium Resources has an expected earnings growth rate of 20% for 2020. Its shares have returned 10.5% in the past year.
Yamana has an expected earnings growth rate of 84.6% for 2020. The company’s shares have gained 74.1% in the past year.
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