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Construction Stock Q1 Earnings on Apr 27: MAS, MTH, OC & More

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The Zacks Construction sector has been performing pretty well of late. The sector is banking on solid housing market dynamics, improvement in manufacturing and infrastructural activities and operational efficiencies. These positive factors are likely to have contributed to the upcoming results.

The rising demand for non-residential and infrastructural activities for private and public project work are expected to have supported growth. Other factors like warmer temperature, drier weather, prudent cost-saving efforts, a disciplined approach to bidding, project management, strength in funding programs across the states and higher demand for road repair and maintenance are expected to have benefited the companies’ quarterly performance.

However, supply-chain bottlenecks, material and labor constraints and project delays are persistent concerns. This apart, Fed’s latest rate hike of 0.25-0.5% and increasing home prices are hitting the affordability of prospective buyers amid economic uncertainty. Builders are a bit pessimistic about the future, which is evident from the latest National Association of Home Builders/Wells Fargo Housing Market Index. Per the report, homebuilder sentiment dropped 2 points to 77 in April, marking the fourth consecutive month of decline.

Q1 Expectations

Per the latest Earnings Outlook, construction sector earnings are expected to grow 16% year over year in the to-be-reported quarter, indicating a plunge from 26.4% growth registered in fourth-quarter 2021. Revenues are projected to increase 13.9% year over year, suggesting a fall from 16% growth registered in the last reported quarter.

A Handful of Construction Stocks to Watch

A handful of companies from the construction space are likely to release their first-quarter 2022 results on Apr 27. Let’s take a quick glance at how these stocks are poised ahead of their respective earnings release.

According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Masco Corporation (MAS - Free Report) is slated to report first-quarter results before the opening bell. In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 5.6% and declined 10.7% year over year due to supply-chain challenges and inflation headwinds. On the contrary, net sales increased 8.7% year over year and topped the consensus mark by 2.3%, thanks to strong demand across categories and channels. Masco’s shares have declined 25.7% so far this year. Its earnings topped the consensus mark in each of the trailing four quarters, with the average surprise being 13.2%, as shown in the chart below:

Masco Corporation Price and EPS Surprise

 

Masco Corporation Price and EPS Surprise

Masco Corporation price-eps-surprise | Masco Corporation Quote

 

The chances of MAS delivering an earnings beat are low this time around as it has an Earnings ESP of -0.19% and a Zacks Rank #4 (Sell).

The Zacks Consensus Estimate for Masco’s first-quarter earnings is pegged at 88 cents per share, suggesting a decline of 1.1% from the year-ago quarter’s figure of 89 cents. Earnings estimates for the said period have moved down 1.1% in the past 30 days, depicting analysts’ concern over the company’s growth potential. The consensus estimate for net sales is pegged at $2.08 billion, indicating a 5.5% increase from the prior-year quarter’s figure.

Masco is witnessing strong performance in the Decorative Architectural Products and Plumbing Products segments. Its paint business, especially within the PRO and DIY markets, has been witnessing strong growth in the past few quarters. (Read more: Will Masco be Able to Defeat Inflation in Q1 Earnings?)

Meritage Homes Corporation (MTH - Free Report) is slated to report first quarter results after market close. In the last reported quarter, the company’s earnings topped the Zacks Consensus Estimate by 3.5%, but home closing revenues missed the same by 0.2%. Earnings increased 57% on a year-over-year basis. Its earnings topped the consensus mark in the trailing four quarters, with the average being 44.5%, as shown in the chart below:

Meritage Homes Corporation Price and EPS Surprise

 

Meritage Homes Corporation Price and EPS Surprise

Meritage Homes Corporation price-eps-surprise | Meritage Homes Corporation Quote

 

Our proven model does not conclusively predict an earnings beat for MTH as it has an Earnings ESP of 0.00% and a Zacks Rank #3.

The Zacks Consensus Estimate for first-quarter 2022 earnings has been unchanged in the past 60 days at $4.69 per share. The said figure indicates a 36.3% increase from the year-ago quarter’s earnings of $3.44 per share. The consensus mark for revenues is at $1.26 billion, suggesting a 16.4% year-over-year improvement.

Despite unprecedented supply chain issues and increased inflation, Meritage Homes’ first-quarter revenues are expected to have increased from the year-ago quarter’s level, buoyed by a highly-motivated buyer. (Read more: Meritage Homes to Post Q1 Earnings: What's in the Offing?)

Owens Corning (OC - Free Report) is slated to report first quarter results before the opening bell. In the last reported quarter, the company’s earnings and sales beat the Zacks Consensus Estimate by 15.8% and 5.8% and increased 15.8% and 10.7% on a year-over-year basis, respectively. Shares of Owens Corning have dropped 2.7% in the year-to-date period. Its earnings topped the consensus mark in the trailing four quarters, with the average being 15.5%, as shown in the chart below:

Owens Corning Inc Price and EPS Surprise

 

Owens Corning Inc Price and EPS Surprise

Owens Corning Inc price-eps-surprise | Owens Corning Inc Quote

 

Our proven model predicts an earnings beat for Owens Corning this time around, as it has an Earnings ESP of +0.37% and a Zacks Rank #3.

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has moved up 1 cent to $2.42 per share in the past 30 days. The estimated figure indicates 39.9% growth from the prior-year quarter’s levels. Also, the consensus mark for revenues is pegged at $2.23 billion, suggesting 16.2% year-over-year growth.

Owens Corning has been benefiting from strong demand across markets served as well as commercial and operational execution. Also, focus on acquisition, and regular investment in new insulation materials and systems in nonresidential applications are likely to boost the top line in the to-be-reported quarter.

United Rentals, Inc. (URI - Free Report) is slated to report first-quarter results after market close. In the last reported quarter, its earnings and revenues missed the Zacks Consensus Estimate by 6.9% and 0.6%, respectively. This largest equipment rental company’s fourth-quarter earnings and revenues rallied 46.6% and 21.8% year over year, respectively. URI’s shares have declined 5.7% so far this year. Its earnings missed the consensus mark in two of the trailing four quarters and missed in other two, with the average surprise being 3%, as shown in the chart below:

United Rentals, Inc. Price and EPS Surprise

 

United Rentals, Inc. Price and EPS Surprise

United Rentals, Inc. price-eps-surprise | United Rentals, Inc. Quote

 

Our proven model predict an earnings beat for URI as it has an Earnings ESP of +10.11% and a Zacks Rank #3.

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has moved down to $5.28 per share from $5.31 in the past seven days. The estimated figure indicates 53% growth from the year-ago quarter’s earnings of $3.45 per share. The consensus mark for revenues is at $2.45 billion, suggesting a 19% year-over-year improvement.

Higher pricing and improved activity level backed by stronger demand in each of the end markets served in North America (industrial and other non-construction, commercial construction, and residential construction) are expected to aid United Rentals’ first-quarter results. Recovery across geographies and verticals — with solid activity in heavy manufacturing, corporate campuses, schools and transmission lines — is expected to have contributed to the top line. (Read more: United Rentals to Post Q1 Earnings: What's in Store?)

Taylor Morrison Home Corporation (TMHC - Free Report) is slated to report first-quarter results before market open. In the last reported quarter, earnings surpassed the Zacks Consensus Estimate by 4.8% and surged 204.2% on a year-over-year basis. Revenues lagged the consensus mark by 4.7%, but rose 60.9% year over year on the back of solid housing demand, acquisition synergies and production efficiencies. TMHC’s shares have declined 18.1% in the year-to-date period. TMHC’s earnings topped the consensus mark in two of the trailing four quarters and lagged in other two, with the average surprise being 2.1%, as shown in the chart below:

Taylor Morrison Home Corporation Price and EPS Surprise

 

Taylor Morrison Home Corporation Price and EPS Surprise

Taylor Morrison Home Corporation price-eps-surprise | Taylor Morrison Home Corporation Quote

 

Our proven model does not conclusively predict an earnings beat for TMHC as it has an Earnings ESP of -6.42% and a Zacks Rank #4.

For the quarter to be reported, the Zacks Consensus Estimate for earnings is pegged at $1.21 per share. The projection suggests a 61.3% increase from the year-ago quarter’s figure of 75 cents. The Zacks Consensus Estimate for revenues is pegged at $1.59 billion, suggesting 12.5% year-over-year growth.

The company is likely to have benefited from product refinement, process streamlining and asset-lighter land investments strategies along with a solid economic backdrop, operational excellence and capital efficiency in the to-be-reported quarter. Yet, supply chain headwinds and higher costs are denting the profitability.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.