A month has gone by since the last earnings report for Valmont Industries (VMI Quick QuoteVMI - Free Report) . Shares have lost about 6.2% in that time frame, outperforming the S&P 500.

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

Valmont’s Earnings & Revenues Surpass Estimates in Q1

Valmont registered profits of $62.3 million or $2.90 per share in first-quarter 2022, up from $55 million or $2.57 per share in the year-ago quarter.

Barring one-time items, adjusted earnings were $3.07 per share in the reported quarter, beating the Zacks Consensus Estimate of $2.30.

Revenues in the quarter were $980.8 million, up 26.6% year over year. The figure also surpassed the Zacks Consensus Estimate of $885.1 million.  Sales were driven by favorable pricing and higher volumes.

Segment Highlights

On Apr 6, 2022, the company announced that it had realigned its reporting segment structure beginning with the first-quarter 2022 results. The new reporting segments are Infrastructure (consists of the previous Utility Support Structures, Engineered Support Structures and Coatings) and Agriculture (a renaming of the Irrigation segment).

Sales in the Infrastructure segment increased 23.8% year over year to $680.7 million in the reported quarter. This was led by favorable pricing globally and increased volumes, especially for telecommunication products.

Sales in the Agriculture segment rose 33.5% year over year to $306.6 million. The upside was driven by higher pricing of irrigation equipment worldwide, higher volumes in North American markets and increased technology sales.

Financial Position

Valmont ended the first quarter with cash and cash equivalents of $149.7 million, down 61.8% year over year. Long-term debt stood at around $963 million, up 32% year over year.

Cash flows from operating activities were $2.7 million for the quarter (as of Mar 26, 2022), down from $33.2 million for the same period a year ago (as of Mar 27, 2021).

Outlook

Valmont revised its outlook for 2022. It expects net sales growth for 2022 in the range of 11-17% year over year, up from 9-14% expected earlier. The company expects earnings per share (EPS) in the range of $12.30-$12.80 for the year, up from $11.55-$12.30 expected earlier. Adjusted EPS are now projected in the band of $13-$13.50, up from the prior forecast of $12.25-$13.

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

The company raised its outlook due to several positive drivers. Valmont continued to execute from a position of strength to drive growth and performance, with significant momentum led by strong, global market drivers across its businesses. The company entered the second quarter with a record backlog, indicating strong market demand. It also continues to execute pricing strategies to manage inflation.

 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

The consensus estimate has shifted 8.52% 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 F on the value side, putting it in the fifth quintile for this investment strategy.

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

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Valmont has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.