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Vulcan Materials' (VMC) Inorganic Growth in Full Swing
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Leading producer of construction aggregates in the U.S., Vulcan Materials Company (VMC - Free Report) has been growing its footprint and securing positions in the best markets in America via acquisitions. Recently, the company signed an agreement with SPO Partners to buy the latter’s aggregates business, Aggregates USA LLC.
With this addition, Vulcan will get hold of Aggregates USA LLC’s 31 facilities that serve high-growth markets throughout the southeastern U.S. comprising Georgia, Florida, Tennessee, South Carolina and Virginia.
The transaction, worth $900 million in cash, is subject to customary closing conditions and regulatory provisions under the Hart-Scott-Rodino Act. The acquisition is expected to be accretive to the company's earnings per share in the first year following the close.
The acquisition will help Vulcan to benefit the most from state highway funding programs in Georgia, Florida, South Carolina, Tennessee, and Virginia, and on the continued private sector growth across the region.
Notably, Vulcan will be able to serve Georgia with three granite quarries, two of which have rail capabilities, thereby boosting its reach in important markets. It will also have 16 rail distribution yards in Georgia, South Carolina and Florida. Moreover, the deal comprises 12 limestone quarries in eastern Tennessee and southwest Virginia.
Since becoming a public company in 1956, Vulcan followed a systematic inorganic strategy for expansion and has wrapped up various bolt-on acquisitions that had contributed significantly to its growth. In 2016, Vulcan expanded its aggregates distribution capabilities in Georgia and completed two strategic bolt-on acquisitions in New Mexico and Texas. These buyouts expand its ability to serve customers well and bring in operational and commercial synergies.
Additionally, sustained growth in private construction activity improves the demand for both aggregates as well as non-aggregate businesses of Vulcan. Positives like an improving economy, modest wage growth, low unemployment levels, positive consumer confidence and a tight supply situation raise optimism about the sector’s performance in 2017. As such, demand for Vulcan’s products should increase as well, thereby driving revenues.
Share Price Performance
Vulcan Materials’ shares have gained 1.6% in the last three months, outperforming the Zacks categorized Building-Cement/Concrete/AG industry’s loss of 1.2%. Earnings estimate for the current year have moved north by 2.5% and for 2018 by 1.5% in the last 30 days. Going forward, the company’s strong aggregate reserve position and bolt-on acquisitions should drive the stock’s performance in the upcoming quarters as well.
Zacks Rank & Stocks to Consider
Vulcan Materials carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the industry include Summit Materials, Inc. (SUM - Free Report) , U.S. Concrete, Inc. and CEMEX, S.A.B. de C.V. (CX - Free Report) .
Summit Materials and U.S. Concrete sport a Zacks Rank #1 (Strong Buy). Full-year 2017 earnings for Summit Materials are expected to increase 41.7%, while that of U.S. Concrete is likely to rise 49.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
CEMEX, a Zacks Rank #2 (Buy) stock, is expected to witness 32.8% growth in 2017 earnings.
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Vulcan Materials' (VMC) Inorganic Growth in Full Swing
Leading producer of construction aggregates in the U.S., Vulcan Materials Company (VMC - Free Report) has been growing its footprint and securing positions in the best markets in America via acquisitions. Recently, the company signed an agreement with SPO Partners to buy the latter’s aggregates business, Aggregates USA LLC.
With this addition, Vulcan will get hold of Aggregates USA LLC’s 31 facilities that serve high-growth markets throughout the southeastern U.S. comprising Georgia, Florida, Tennessee, South Carolina and Virginia.
The transaction, worth $900 million in cash, is subject to customary closing conditions and regulatory provisions under the Hart-Scott-Rodino Act. The acquisition is expected to be accretive to the company's earnings per share in the first year following the close.
The acquisition will help Vulcan to benefit the most from state highway funding programs in Georgia, Florida, South Carolina, Tennessee, and Virginia, and on the continued private sector growth across the region.
Notably, Vulcan will be able to serve Georgia with three granite quarries, two of which have rail capabilities, thereby boosting its reach in important markets. It will also have 16 rail distribution yards in Georgia, South Carolina and Florida. Moreover, the deal comprises 12 limestone quarries in eastern Tennessee and southwest Virginia.
Since becoming a public company in 1956, Vulcan followed a systematic inorganic strategy for expansion and has wrapped up various bolt-on acquisitions that had contributed significantly to its growth. In 2016, Vulcan expanded its aggregates distribution capabilities in Georgia and completed two strategic bolt-on acquisitions in New Mexico and Texas. These buyouts expand its ability to serve customers well and bring in operational and commercial synergies.
Additionally, sustained growth in private construction activity improves the demand for both aggregates as well as non-aggregate businesses of Vulcan. Positives like an improving economy, modest wage growth, low unemployment levels, positive consumer confidence and a tight supply situation raise optimism about the sector’s performance in 2017. As such, demand for Vulcan’s products should increase as well, thereby driving revenues.
Share Price Performance
Vulcan Materials’ shares have gained 1.6% in the last three months, outperforming the Zacks categorized Building-Cement/Concrete/AG industry’s loss of 1.2%. Earnings estimate for the current year have moved north by 2.5% and for 2018 by 1.5% in the last 30 days. Going forward, the company’s strong aggregate reserve position and bolt-on acquisitions should drive the stock’s performance in the upcoming quarters as well.
Zacks Rank & Stocks to Consider
Vulcan Materials carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the industry include Summit Materials, Inc. (SUM - Free Report) , U.S. Concrete, Inc. and CEMEX, S.A.B. de C.V. (CX - Free Report) .
Summit Materials and U.S. Concrete sport a Zacks Rank #1 (Strong Buy). Full-year 2017 earnings for Summit Materials are expected to increase 41.7%, while that of U.S. Concrete is likely to rise 49.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
CEMEX, a Zacks Rank #2 (Buy) stock, is expected to witness 32.8% growth in 2017 earnings.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>