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North American Construction (NOA) Q3 Earnings: What's Up?
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North American Construction Group Ltd. or NACG (NOA - Free Report) is scheduled to release third-quarter 2018 results on Oct 30, after the closing bell. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by a margin of 100%.
How are Estimates Faring?
Let’s take a look at the estimate revision trend in order to get a clear picture of what analysts are thinking about the company prior to the earnings release. For the quarter to be reported, the Zacks Consensus Estimate is currently pegged at break-even earnings, trending downward over the past 30 days. However, this reflects an improvement from the year-ago loss of 2 cents per share. Revenues are expected to be $58.3 million, up 4.4% year over year.
North American Construction Group Ltd. Price and EPS Surprise
Third-quarter 2018 is expected to witness higher revenues owing to an increase in mine support services, along with overburden removal on earthworks activity at each of the Mildred Lake and Millennium mines. NACG continues to generate civil construction revenues from its three-year mine support contract, which began in the third quarter of 2017, at the Highland Valley Copper mine in British Columbia. Also, mine support services, realized from the Dene North Site Services partnership and multiple oil sands operations, are expected to contribute to growth.
This is evident from the company’s revenues that grew 67% in the second quarter of 2018, backed by the above-mentioned factors. Meanwhile, higher levels of heavy civil construction activity at the Kearl mine contributed to growth. The trend is likely to continue in the third quarter as well.
Additionally, the company is progressing well with its three-year organic growth plan that targets minimum 15% compound growth in revenues and EBITDA over the said period. The plan requires NACG to generate production-related recurring service volumes in the company’s core oil sands market, together with the addition of value-creating services. In fact, the second quarter of 2018 marks the second year of this growth plan, following 37% and 24% improvement in revenues and EBITDA in 2017, respectively. NACG is on track to exceed its growth targets for 2018. EBITDA growth is expected to be at least 30% in 2018.
The company’s systematic inorganic strategy also bodes well in order to diversify its offerings in other commodity areas (e.g. base metals, precious metals, and diamonds) and infrastructure-related projects that involve major earthwork.
Here is What Our Quantitative Model Predicts:
Our proven model does not conclusively show that NACG is likely to beat on earnings in the to-be-reported quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: It currently has a Zacks Rank #1, which increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings surprise.
Meanwhile, we caution against stocks with a Zacks Rank #4 and 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions. You can see the complete list of today’s Zacks #1 Rank stocks here.
Notably, NACG, which shares space with EMCOR Group, Inc. (EME - Free Report) and Dycom Industries, Inc. (DY - Free Report) , surpassed the Zacks Consensus Estimate in three of the trailing four quarters, recording an average positive surprise of 35.4%.
A Stock With Favorable Combination
Here is one construction stock that you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat in the upcoming release:
MasTec, Inc. (MTZ - Free Report) has an Earnings ESP of +2.2% and a Zacks Rank #2. The company is slated to report quarterly results on Nov 1.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
North American Construction (NOA) Q3 Earnings: What's Up?
North American Construction Group Ltd. or NACG (NOA - Free Report) is scheduled to release third-quarter 2018 results on Oct 30, after the closing bell. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by a margin of 100%.
How are Estimates Faring?
Let’s take a look at the estimate revision trend in order to get a clear picture of what analysts are thinking about the company prior to the earnings release. For the quarter to be reported, the Zacks Consensus Estimate is currently pegged at break-even earnings, trending downward over the past 30 days. However, this reflects an improvement from the year-ago loss of 2 cents per share. Revenues are expected to be $58.3 million, up 4.4% year over year.
North American Construction Group Ltd. Price and EPS Surprise
North American Construction Group Ltd. Price and EPS Surprise | North American Construction Group Ltd. Quote
Factors at Play
Third-quarter 2018 is expected to witness higher revenues owing to an increase in mine support services, along with overburden removal on earthworks activity at each of the Mildred Lake and Millennium mines. NACG continues to generate civil construction revenues from its three-year mine support contract, which began in the third quarter of 2017, at the Highland Valley Copper mine in British Columbia. Also, mine support services, realized from the Dene North Site Services partnership and multiple oil sands operations, are expected to contribute to growth.
This is evident from the company’s revenues that grew 67% in the second quarter of 2018, backed by the above-mentioned factors. Meanwhile, higher levels of heavy civil construction activity at the Kearl mine contributed to growth. The trend is likely to continue in the third quarter as well.
Additionally, the company is progressing well with its three-year organic growth plan that targets minimum 15% compound growth in revenues and EBITDA over the said period. The plan requires NACG to generate production-related recurring service volumes in the company’s core oil sands market, together with the addition of value-creating services. In fact, the second quarter of 2018 marks the second year of this growth plan, following 37% and 24% improvement in revenues and EBITDA in 2017, respectively. NACG is on track to exceed its growth targets for 2018. EBITDA growth is expected to be at least 30% in 2018.
The company’s systematic inorganic strategy also bodes well in order to diversify its offerings in other commodity areas (e.g. base metals, precious metals, and diamonds) and infrastructure-related projects that involve major earthwork.
Here is What Our Quantitative Model Predicts:
Our proven model does not conclusively show that NACG is likely to beat on earnings in the to-be-reported quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: It currently has a Zacks Rank #1, which increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings surprise.
Meanwhile, we caution against stocks with a Zacks Rank #4 and 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Notably, NACG, which shares space with EMCOR Group, Inc. (EME - Free Report) and Dycom Industries, Inc. (DY - Free Report) , surpassed the Zacks Consensus Estimate in three of the trailing four quarters, recording an average positive surprise of 35.4%.
A Stock With Favorable Combination
Here is one construction stock that you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat in the upcoming release:
MasTec, Inc. (MTZ - Free Report) has an Earnings ESP of +2.2% and a Zacks Rank #2. The company is slated to report quarterly results on Nov 1.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>