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Valmont (VMI) Up 8.1% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Valmont Industries (VMI - Free Report) . Shares have added about 8.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Valmont due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Valmont’s Earnings & Revenues Surpass Estimates in Q4

Valmont registered profits of $26.8 million or $1.25 per share in fourth-quarter 2021, down from $35.8 million or $1.68 per share in the year-ago quarter.

Barring one-time items, adjusted earnings were $2.73 per share in the reported quarter that beat the Zacks Consensus Estimate of $2.65.

Revenues in the quarter were $963.3 million, up 20.7% year over year. The figure also surpassed the Zacks Consensus Estimate of $866.5 million. Sales were driven bythe company’s pricingactions and strong market demand. It witnessed growth across all segments led by significantly higher sales in the Irrigation unit.

Segment Highlights

Infrastructure-Related

Sales in the Engineered Support Structures segment increased 14% year over year to $291.9 million in the reported quarter. This was led by favorable pricing and increased volumes of wireless communication products.

Sales in the Utility Support Structures segment rose 19.5% year over year to $324 million. The upside was driven by higher pricing and higher sales of solar tracker solutions led by utilities' continued investments in grid modernization and renewable energy markets.

Sales in the Coatings segment increased 9.9% year over year to $98.2 million, led by higher average selling prices and sales from the new greenfield facility in Pittsburgh, PA—  which started operations last year.

Agriculture-Related

Sales in the Irrigation unit amounted to $276.8 million, up 38.9% year over year on higher average selling prices, increased volumes across all markets, particularly North America and Brazil, and higher technology sales. Sales in North America were $150.5 million, up 55.1% year over year, led by favorable pricing and higher volumes. 

International irrigation sales increased 23.5% year over year to $126.3 million.

FY21 Results

Earnings (as reported) for full-year 2021 were $9.1 per share compared with $6.57 per share a year ago. Net sales rose 20.9% year over year to around $3,501.6 million.

Financial Position

Valmont ended 2021 with cash and cash equivalents of $177.2 million, down 55.8% year over year. Long-term debt stood at $947.1 million, up 30% year over year.

Cash flows from operating activities were $65.9 million for the year (as of Dec 25, 2021), down from $316.3 million for the same period a year ago (as of Dec 26, 2020).

Outlook

Valmont expects net sales of $3.8-$4 billion for 2022, suggesting an increase of 9-14% year over year. It expects earnings per share in the range of $11.55-$12.30 for the year.

Valmont also anticipates capital expenditures in the range of $110-$120 million for 2022.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -19.3% due to these changes.

VGM Scores

At this time, Valmont has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Valmont has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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