Construction, one of the 16 broad Zacks sectors, has been showing improvement since the beginning of 2016, with year-to-date construction spending increasing roughly 4.9% in August. Per the U.S. Census Bureau report, spending in residential construction grew 6.2%, while that in nonresidential construction expanded 4%. Private spending has increased 7% while public spending is believed to have fallen 1.3%.
Below we briefly discuss the broader sectors’ earnings trend so far in the Jul–Sep 2016 quarter.
As of Oct 14, roughly 15.4% of Construction stocks in the S&P 500 Group reported results for the July–September quarter, recording 11.6% increase in earnings and 15.6% growth in revenue. Considering the results of all Construction stocks in the S&P 500 Group, earnings for the sector are predicted to increase 6.3%, while revenue will grow 7.2%.
What’s in Store for 2 Construction Stocks, UFPI, NVR, for Jul–Sep ‘16 Quarter?
Below we discuss briefly the expectations from the upcoming results (July–September quarter) for two construction stocks:
Universal Forest Products Inc. (UFPI - Analyst Report) : This building products company is slated to release its third-quarter 2016 results on Oct 18, after the market closes. In the four trailing quarters, the company reported better-than-expected results on all occasions with an average positive earnings surprise of 12.05%.
Our proven model does not conclusively show that Universal Forest Products will be able to pull an earnings surprise this quarter. This is because the company lacks the right combination of two key ingredients — a positive Earnings ESP (the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate) and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold). The company currently has a 0.00% Earnings ESP and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here. Over the last 60 days, the Zacks Consensus Estimate for the stock has remained stable at $1.46 per share for the third quarter.
NVR, Inc. (NVR - Snapshot Report) : This construction company is anticipated to release its third-quarter 2016 results on Oct 18 as well. The company reported lower-than-expected results in one of the four trailing quarters, while posting better-than-expected results in three. Average earnings surprise was a positive 2.87%.
Our proven model does not conclusively show that NVR, Inc. will likely beat earnings this quarter because it currently carries a Zacks Rank #3 and -1.71% Earnings ESP. Over the last 60 days, the Zacks Consensus Estimate for the stock has decreased 3.2% to $30.47 per share for the third quarter.
Stay tuned! Check back on our full write-up on earnings release of Universal Forest Products Inc.
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