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Construction Stock Earnings Lineup on Apr 28: EME, KBR & More

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So far in the current earnings season, the Zacks Construction sector has performed decently, thanks to solid housing momentum and improving manufacturing and infrastructural works. Also, strengthening demand in repair and remodeling businesses have added to the bliss. These positive trends are likely to get reflected in the upcoming results.

Higher demand for non-residential and infrastructural activities, particularly for private and public project work, is expected to have supported growth. Other factors like favorable 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. Fed’s latest rate hike of 0.25-0.5% and increasing home prices are affecting the affordability of prospective buyers amid economic uncertainty.

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 recorded 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 28. 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.

EMCOR Group, Inc. (EME - Free Report) is slated to release first-quarter results before the opening bell. In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 1.6% but rose 1.6% year over year. Net sales increased 15.7% year over year and topped the consensus mark by 3.4%, thanks to strong demand across the business. EMCOR’s shares have declined 12.2% so far this year. Its earnings topped the consensus mark in three of the last four quarters and missed the same once, the average surprise being 10.9%, as shown in the chart below.

EMCOR Group, Inc. Price and EPS Surprise

EMCOR Group, Inc. Price and EPS Surprise

EMCOR Group, Inc. price-eps-surprise | EMCOR Group, Inc. Quote

The chances of EME delivering an earnings beat are low this time around as it has an Earnings ESP of 0.00% and a Zacks Rank #3.

The Zacks Consensus Estimate for EME’s first-quarter earnings is pegged at $1.56 per share, suggesting a rise of 1.3% from the year-ago quarter’s figure of $1.54. The consensus estimate for net sales is pegged at $2.46 billion, indicating a 6.7% increase from the prior-year quarter’s figure.

EMCOR has been witnessing robust demand for its services owing to strong momentum in the U.S. Mechanical and Electrical Construction segments. Solid acquisition strategies and strong liquidity are added positives. These factors are likely to have contributed to the to-be-reported quarter’s performance.

KBR, Inc. (KBR - Free Report) is slated to report first-quarter results before the opening bell. In the last reported quarter, the company’s earnings topped the Zacks Consensus Estimate by 6.2% and increased 35.3%. Total revenues also increased 70.5% year over year and surpassed the consensus mark by 0.6%. Its earnings topped the consensus mark in the trailing four quarters, the average being 10.4%, as shown in the chart below:

KBR, Inc. Price and EPS Surprise

KBR, Inc. Price and EPS Surprise

KBR, Inc. price-eps-surprise | KBR, Inc. Quote

Our proven model predicts an earnings beat for KBR as it has an Earnings ESP of +6.64% and a Zacks Rank #3.

The Zacks Consensus Estimate for first-quarter earnings declined in the past 30 days to 57 cents per share. The projected figure indicates an 18.8% increase from the year-ago quarter’s earnings of 48 cents per share. The consensus mark for revenues is pegged at $1.74 billion, suggesting a 19.2% year-over-year improvement. So far this year, KBR has gained 8%.

The company is likely to have gained from solid Government Solutions organic growth, strong execution across the business and the acquisitions. The determination to reduce emissions, product diversification, energy efficiency and more sustainable technologies and solutions add to KBR’s bliss.

M.D.C. Holdings, Inc. (MDC - Free Report) is slated to report first-quarter results before the opening bell. In the last reported quarter, the company’s top and bottom line lagged the Zacks Consensus Estimate by 12.3% and 6.2% but improved 8.9% and 19.6% year over year, respectively. Its earnings lagged the consensus estimate in two of the trailing seven quarters and beat the same on the other occasions, as shown in the chart below:

M.D.C. Holdings, Inc. Price and EPS Surprise

M.D.C. Holdings, Inc. Price and EPS Surprise

M.D.C. Holdings, Inc. price-eps-surprise | M.D.C. Holdings, Inc. Quote

The chances of MDC delivering an earnings beat are low this time around as it has an Earnings ESP of 0.00% and a Zacks Rank #3.

The Zacks Consensus Estimate for MDC’s first-quarter earnings is pegged at $1.90 per share, calling for growth of 25.8% from the year-ago reported figure. The consensus estimate for revenues is pegged at $1.22 billion, indicating a 12.4% increase from the prior-year quarter’s reported number. MDC’s stock has fallen 33.8% in the year-to-date period.

This leading homebuilder has been benefiting from the build-to-order process, accretive land acquisitions and efforts to provide affordable homes. Yet, supply chain issues and other industry woes are likely to have put pressure on the bottom line.

PulteGroup, Inc. (PHM - Free Report) is slated to report quarterly results before the opening bell. In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 9.6% and 4.7%, respectively. Earnings and revenues increased 64.1% and 36.5% on a year-over-year basis, respectively. PHM surpassed earnings estimates in 19 of the trailing 21 quarters and missed on one occasion, as shown in the chart below:

PulteGroup, Inc. Price and EPS Surprise

PulteGroup, Inc. Price and EPS Surprise

PulteGroup, Inc. price-eps-surprise | PulteGroup, Inc. Quote

Our proven model does not conclusively predicts an earnings beat for PHM this time around as it has an Earnings ESP of -5.61% and a Zacks Rank #3.

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has remained unchanged at $1.71 per share in the past 60 days. The estimated figure indicates a 33.6% increase from the year-ago earnings of $1.28 per share. Also, the consensus mark for revenues is $3.06 billion, suggesting 11.9% year-over-year growth. Shares of PHM have declined 25.5% in the year-to-date period.

PulteGroup is benefiting from the successful execution of initiatives to boost profitability, focusing on entry-level homes. PulteGroup’s earnings and revenues are expected to have increased in the first quarter, given a prudent land investment strategy, focusing on entry-level buyers along with a positive housing market trend. (Read more: What's in the Cards for PulteGroup's Q1 Earnings?)

Patrick Industries, Inc. (PATK - Free Report) is slated to report first-quarter results before market open. In the last reported quarter, earnings surpassed the Zacks Consensus Estimate by 24.4% and surged 55.5% on a year-over-year basis. Revenues topped the consensus mark by 9.4% and rose 49% year over year on solid leisure lifestyle and housing markets. PATK’s shares have declined 25.7% in the year-to-date period. Patrick Industries’ earnings topped the consensus mark in the trailing four quarters, with the average surprise being 29.4%, as shown in the chart below:

Patrick Industries, Inc. Price and EPS Surprise

Patrick Industries, Inc. Price and EPS Surprise

Patrick Industries, Inc. price-eps-surprise | Patrick Industries, Inc. Quote

Our proven model does not conclusively predict an earnings beat for PATK as it has an Earnings ESP of -1.96% and a Zacks Rank #3.

For the quarter to be reported, the Zacks Consensus Estimate for earnings is pegged at $2.89 per share. The projection suggests a 60.6% increase from the year-ago quarter’s figure of $1.80 per share. The Zacks Consensus Estimate for revenues is pegged at $1.20 billion, suggesting 41% year-over-year growth.

Patrick’s first-quarter earnings and revenues are likely to have improved impressively on the back of a solid leisure lifestyle as well as housing markets. This apart, accretive acquisitions and robust prospects in housing and the repair and remodel space are likely to have supported growth in the to-be-reported quarter.
 
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