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MLM or MAS: Which Construction Stock Will Post Better Q4 Earnings?
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The Zacks Construction sector started the earnings season on a positive note backed by robust housing market dynamics despite coronavirus-led market disruptions. The Q4 earnings season has so far seen earnings releases from approximately 64% of construction companies. While 88.9% of the total posted an earnings beat, 100% surpassed revenue estimates.
Resilient housing market fundamentals in the United States buoyed by the Fed’s dovish stance, low borrowing costs and rising trend of people to invest more on their homes are expected to have benefited the companies’ top lines.
A number of project awards across multiple business segments — including communications, transmission and power, along with infrastructural projects in domestic as well as international markets — also contributed significantly to the companies’ performance. Again, rising public investments in water infrastructure and utility plants, as well as encouraging prospects in the healthcare market are expected to have acted as tailwinds.
However, higher land and labor costs, along with the shortage of home supplies might have offset the positives. Record low inventory level has been deterring prospective buyers, especially first-timers. Furthermore, widespread slowdown in economic activity owing to the coronavirus outbreak might have weighed on the companies’ profitability. Overall, project delays and cancellations are expected to reflect on Q4 results.
Overall Prediction
Per the latest Earnings Preview, the construction sector’s earnings are expected to increase 38.2% for the fourth quarter, indicating an increase from 19.3% in the third quarter. Revenues are projected to increase 11.2%, suggesting a rise from 6.6% growth in the prior quarter.
Notable Recent Releases
Some notable construction companies like Fastenal Company (FAST - Free Report) , United Rentals, Inc. (URI - Free Report) and Weyerhaeuser Company (WY - Free Report) recently released quarterly numbers. Fastenal came up with better-than-expected results for fourth-quarter fiscal 2020 (ended Dec 31, 2020), courtesy of higher demand for personal protective equipment products. United Rentals’ fourth-quarter 2020 earnings and revenues beat the Zacks Consensus Estimate. In fact, both the top and bottom lines surpassed the consensus estimate for 12 straight quarters. Meanwhile, Weyerhaeuser’s fourth-quarter 2020 earnings missed the Zacks Consensus Estimate but revenues beat the same.
Construction Stocks to Watch
Let’s take a quick glance at how the following construction stocks are poised ahead of their fourth-quarter 2020 earnings releases on Feb 9.
Our proven model shows that companies with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP have higher chances of beating earnings estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Martin Marietta Materials, Inc. (MLM - Free Report) is scheduled to report quarterly results before the opening bell. The Zacks Consensus Estimate for the company’s fourth-quarter earnings is pegged at $2.28 per share, which suggests a 9.1% increase from $2.09 reported in the year-ago period. The consensus mark for revenues is pegged at $1.05 billion, which calls for 2.5% growth from the prior-year reported figure. Martin Marietta’s earnings topped the consensus mark in two of the last four quarters and missed the same on the other two occasions, with the average surprise being 2.3%, as shown in the chart below:
Martin Marietta Materials, Inc. Price and EPS Surprise
Its chances of delivering an earnings beat are low this time around as it has a Zacks Rank #3 and an Earnings ESP of -1.98%.
Martin Marietta’s earnings and revenues are expected to have witnessed year-over-year growth in the fourth quarter. Infrastructure and construction — particularly for aggregates-intensive highways, roads, as well as streets — are expected to have remained resilient in the quarter, as contractors advanced projects that have been awarded and funded. Also, favorable weather conditions may have been a tailwind.
Its business and earnings have been sensitive to changes in construction spending, particularly housing and public construction in Texas, Colorado, North Carolina, Georgia, Florida, as well as Iowa. Although softer public spending in North Carolina may have been a concern, impressive aggregate shipment in Texas — one of the largest states served by Martin Marietta — will likely help the company post improved year-over-year results.
That said, softer demand resulting from businesses or the government’s budget shortfalls resulting from the COVID-19 pandemic may reflect on the upcoming results. Large non-residential projects have been experiencing delays due to prevailing uncertainty owing to the COVID-19 outbreak.
Overall, despite mixed volumes, pricing (strongest in aggregates) and a favorable cost environment (including lower diesel) are likely to have supported its margins. Although limited visibility in nonresidential construction may have been a concern, strong residential construction and healthier DOT spending than originally expected are likely to have been positives.
Masco Corporation (MAS - Free Report) is slated to report quarterly results before the opening bell. The Zacks Consensus Estimate for Masco’s fourth-quarter earnings is pegged at 74 cents per share, implying 37% growth on a year-over-year basis. The consensus estimate for revenues is $1.81 billion, indicating a 10.3% year-over-year decline (read more: Will Masco Surpass Estimates This Earnings Season?).
In fact, Masco’s earnings topped the consensus mark in all the last four quarters, with the average being 19.9%, as shown in the chart below:
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MLM or MAS: Which Construction Stock Will Post Better Q4 Earnings?
The Zacks Construction sector started the earnings season on a positive note backed by robust housing market dynamics despite coronavirus-led market disruptions. The Q4 earnings season has so far seen earnings releases from approximately 64% of construction companies. While 88.9% of the total posted an earnings beat, 100% surpassed revenue estimates.
Resilient housing market fundamentals in the United States buoyed by the Fed’s dovish stance, low borrowing costs and rising trend of people to invest more on their homes are expected to have benefited the companies’ top lines.
A number of project awards across multiple business segments — including communications, transmission and power, along with infrastructural projects in domestic as well as international markets — also contributed significantly to the companies’ performance. Again, rising public investments in water infrastructure and utility plants, as well as encouraging prospects in the healthcare market are expected to have acted as tailwinds.
However, higher land and labor costs, along with the shortage of home supplies might have offset the positives. Record low inventory level has been deterring prospective buyers, especially first-timers. Furthermore, widespread slowdown in economic activity owing to the coronavirus outbreak might have weighed on the companies’ profitability. Overall, project delays and cancellations are expected to reflect on Q4 results.
Overall Prediction
Per the latest Earnings Preview, the construction sector’s earnings are expected to increase 38.2% for the fourth quarter, indicating an increase from 19.3% in the third quarter. Revenues are projected to increase 11.2%, suggesting a rise from 6.6% growth in the prior quarter.
Notable Recent Releases
Some notable construction companies like Fastenal Company (FAST - Free Report) , United Rentals, Inc. (URI - Free Report) and Weyerhaeuser Company (WY - Free Report) recently released quarterly numbers. Fastenal came up with better-than-expected results for fourth-quarter fiscal 2020 (ended Dec 31, 2020), courtesy of higher demand for personal protective equipment products. United Rentals’ fourth-quarter 2020 earnings and revenues beat the Zacks Consensus Estimate. In fact, both the top and bottom lines surpassed the consensus estimate for 12 straight quarters. Meanwhile, Weyerhaeuser’s fourth-quarter 2020 earnings missed the Zacks Consensus Estimate but revenues beat the same.
Construction Stocks to Watch
Let’s take a quick glance at how the following construction stocks are poised ahead of their fourth-quarter 2020 earnings releases on Feb 9.
Our proven model shows that companies with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP have higher chances of beating earnings estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Martin Marietta Materials, Inc. (MLM - Free Report) is scheduled to report quarterly results before the opening bell. The Zacks Consensus Estimate for the company’s fourth-quarter earnings is pegged at $2.28 per share, which suggests a 9.1% increase from $2.09 reported in the year-ago period. The consensus mark for revenues is pegged at $1.05 billion, which calls for 2.5% growth from the prior-year reported figure. Martin Marietta’s earnings topped the consensus mark in two of the last four quarters and missed the same on the other two occasions, with the average surprise being 2.3%, as shown in the chart below:
Martin Marietta Materials, Inc. Price and EPS Surprise
Martin Marietta Materials, Inc. price-eps-surprise | Martin Marietta Materials, Inc. Quote
Its chances of delivering an earnings beat are low this time around as it has a Zacks Rank #3 and an Earnings ESP of -1.98%.
Martin Marietta’s earnings and revenues are expected to have witnessed year-over-year growth in the fourth quarter. Infrastructure and construction — particularly for aggregates-intensive highways, roads, as well as streets — are expected to have remained resilient in the quarter, as contractors advanced projects that have been awarded and funded. Also, favorable weather conditions may have been a tailwind.
Its business and earnings have been sensitive to changes in construction spending, particularly housing and public construction in Texas, Colorado, North Carolina, Georgia, Florida, as well as Iowa. Although softer public spending in North Carolina may have been a concern, impressive aggregate shipment in Texas — one of the largest states served by Martin Marietta — will likely help the company post improved year-over-year results.
That said, softer demand resulting from businesses or the government’s budget shortfalls resulting from the COVID-19 pandemic may reflect on the upcoming results. Large non-residential projects have been experiencing delays due to prevailing uncertainty owing to the COVID-19 outbreak.
Overall, despite mixed volumes, pricing (strongest in aggregates) and a favorable cost environment (including lower diesel) are likely to have supported its margins. Although limited visibility in nonresidential construction may have been a concern, strong residential construction and healthier DOT spending than originally expected are likely to have been positives.
Masco Corporation (MAS - Free Report) is slated to report quarterly results before the opening bell. The Zacks Consensus Estimate for Masco’s fourth-quarter earnings is pegged at 74 cents per share, implying 37% growth on a year-over-year basis. The consensus estimate for revenues is $1.81 billion, indicating a 10.3% year-over-year decline (read more: Will Masco Surpass Estimates This Earnings Season?).
In fact, Masco’s earnings topped the consensus mark in all the last four quarters, with the average being 19.9%, as shown in the chart below:
Masco Corporation Price and EPS Surprise
Masco Corporation price-eps-surprise | Masco Corporation Quote
The chances of Masco delivering an earnings beat for the fourth quarter are high, as it has an Earnings ESP of +0.17% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>