Now that most of the construction stocks have reported their first quarter 2016 results, let us take a closer look at how well these companies began the year. According to our earnings preview report, 83.3% of the construction companies have beaten earnings estimates while 75.0% have surpassed top-line expectations during the first quarter of 2016.
While some of the headwinds like a volatile energy sector, unfavorable currency translations, and global uncertainties remain, the construction sector has had a positive earnings season so far this season. Most homebuilders, including Lennar Corporation (LEN - Free Report) , KB Home (KBH - Free Report) PulteGroup, Inc. (PHM - Free Report) and D.R. Horton, Inc. (DHI - Free Report) witnessed strong demand and traffic trends. They expect the growth momentum to sustain through the rest of the year. Positives like an improving economy, rising wages, a favorable job outlook and a tight supply situation fuels optimism about the sector’s performance in the rest of 2016.
An increase in home construction activity not only benefits homebuilders but also spurs demand for homebuilding materials, home decoration products and other related businesses. This, in turn, boosts the growth prospects of companies manufacturing these products.
Last week, construction materials companies Vulcan Materials Company (VMC - Free Report) and Martin Marietta Materials, Inc. (MLM - Free Report) reported solid first quarter earnings and sales surprises on the back of rising demand for aggregates (used for construction activity). Meanwhile, reporting in the same week, Weyerhaeuser Company (WY - Free Report) also delivered a positive earnings surprise in the first quarter of 2016. However, its top line came in below the Zacks Consensus Estimate.
Next up, three companies from the construction sector, Advanced Drainage Systems, Inc. (WMS - Free Report) , GCP Applied Technologies Inc. (GCP - Free Report) and Trex Co. Inc. (TREX - Free Report) are set to report their quarterly results on May 10. Will these companies put up a decent performance as well? Let’s have a look at what might be in store for them.
Advanced Drainage Systems, Inc. (WMS - Free Report)
Ohio based drainage system company, Advanced Drainage Systems is set to report its fiscal fourth quarter 2016 results.
The company has an Earnings ESP of +800.00% and a Zacks Rank #5 (Strong Sell). The Zacks Consensus Estimate for the quarter is pegged at a loss of 1 cent.
GCP Applied Technologies Inc. (GCP - Free Report)
A products and technology solutions provider for the construction sector, GCP Applied Technologies is set to report first quarter 2016 results before the market opens.
The company has an Earnings ESP of 0.00% and a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for the quarter is pegged at 17 cents.
Trex Co. Inc. (TREX - Free Report)
Trex is set to report first-quarter 2016 results before the market opens.
Last quarter, the company delivered a positive earnings surprise of 13.04%. The outdoor living products company posted two positive earnings surprises in the past four quarters with an average of 0.89%. The company has an Earnings ESP of 0.00% and a Zacks Rank #2. The Zacks Consensus Estimate for the quarter is pegged at 65 cents.
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