It has been about a month since the last earnings report for Valmont Industries (
VMI Quick Quote VMI - Free Report) . Shares have lost about 6.4% in that time frame, underperforming 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 catalysts.
Valmont’s Q2 Earnings Beat Estimates, Revenues Lag
Valmont reported second-quarter 2023 profit of $89.4 million or $4.21 per share, up from $76.1 million or $3.53 per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share were $4.37, up from $3.70 in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of $4.10.
The upside in earnings can be attributed to favorable pricing, cost management and operational efficiencies.
The company’s revenues were $1,046.3 million in the quarter, down 7.9% year over year. The top line lagged the Zacks Consensus Estimate of $1,143.4 million.
The infrastructure segment’s second-quarter revenues increased 4.2% year over year to $770.6 million. It also beat our estimate of $755 million. This rise was driven by favorable pricing globally, increased volumes, especially in the Solar and Transmission, Distribution, and Substation product lines and contribution from the ConcealFab acquisition. These were partly offset by lower telecommunications volumes.
Agriculture segment revenues totaled $279.9 million, down 25.9% year over year. It fell short of our estimate of $409.5 million. Higher global irrigation equipment prices were outweighed by lower volumes. In North America, sales were impacted by the absence of record backlog delivery and delayed capital investments witnessed in the prior-year quarter. Internationally, strong sales in Brazil couldn't offset lower EMEA region sales, partly due to project timing. Global agriculture technology product and service sales also declined due to lower irrigation equipment volumes.
VMI ended the quarter with cash and cash equivalents of $166.9 million, up 7.7% year over year. Long-term debt was $952.7 million, down 4.3% year over year.
Valmont repurchased $24 million of its stock during the quarter. It had $346.3 million remaining on the share repurchase program at the end of the quarter.
For 2023, Valmont revised its guidance for net sales growth to the range of 0-2% from its previous view of 4-7%. Adjusted EPS guidance was retained in the range of $15.45-$16 per share. It also anticipates capital expenditures in the $105-$115 million range for 2023. The company expects an improved full-year operating margin compared to 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
Currently, Valmont has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Valmont has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.