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What Awaits North American Construction (NOA) in Q3 Earnings?

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North American Construction Group Ltd. or NACG (NOA - Free Report) is scheduled to release third-quarter 2019 results on Oct 28, after the closing bell.

In the last reported quarter, the company’s earnings topped the Zacks Consensus Estimate by 123.1% but revenues missed the same by 44.6%. It reported second-quarter earnings of 29 cents per share, up from 27 cents a year ago, aided by significant backlog. Revenues of $51.1 million, however, were down from $132 million a year ago.

Markedly, NACG reported better-than-expected earnings in three of the last four quarters, with the average surprise being 40.7%.

Trend in Estimate Revision

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has been unchanged at 18 cents over the past 30 days. This indicates a decrease of 35.7% from 28 cents per share reported in the year-ago quarter. The consensus mark for revenues is $73.8 million, suggesting a 41.4% decrease from the year-ago reported figure of $126 million.

Factors to Consider

NACG is expected to have recorded lower revenues and earnings in the third quarter, owing to disruptions caused by COVID-19 restrictions. Site access issues and correlated demobilization and mobilization associated with the same are expected to weigh on the company’s quarterly results.

Overall, reduced activity at mine sites, shift cancellations and continuous delays for overburden removal work due to haul road repairs are expected to have impacted revenues. Also, completion of the Highland Valley Copper Mine contract and heavy civil construction work at the Fort Hills Mine during fourth-quarter 2019 may have added to the woes.

Nevertheless, the company has been constantly focusing on disciplined cost-containment initiatives and effectively operating fleet, albeit smaller in number. The primary initiatives for general and administrative cost reduction have been mandated reduced work hours, and the complete halt of all discretionary and non-essential spending.

Here is What Our Quantitative Model Predicts:

Our proven model does not conclusively predict an earnings beat for NACG 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’s not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: NACG currently has 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 companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.

Eagle Materials Inc. (EXP - Free Report) has an Earnings ESP of +3.45% and a Zacks Rank #3.

Aegion Corporation has an Earnings ESP of +5.26% and holds a Zacks Rank #3.

Owens Corning Inc. (OC - Free Report) has an Earnings ESP of +12.46% and carries a Zacks Rank #1.

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Eagle Materials Inc (EXP) - free report >>

Owens Corning Inc (OC) - free report >>

North American Construction Group Ltd. (NOA) - free report >>

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