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Why Is Valmont (VMI) Down 9.2% Since Last Earnings Report?

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It has been about a month since the last earnings report for Valmont Industries (VMI - Free Report) . Shares have lost about 9.2% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Valmont's Earnings & Sales Surpass Estimates in Q1

Valmont generated profits of roughly $36.5 million or $1.66 per share in first-quarter 2019, down from around $39.3 million or $1.72 in the year-ago quarter.

Barring one-time items, adjusted earnings in the quarter were $1.84 per share which beat the Zacks Consensus Estimate of $1.67.

Net sales in the quarter totaled $692.1 million, down roughly 0.9% year over year. The figure topped the Zacks Consensus Estimate of $677.2 million.  

Segment Highlights

Infrastructure-Related

Sales in the Engineered Support Structures segment totaled $230.3 million, up around 2.4% year over year. The upside can be attributed to improved pricing across the segment along with higher volumes in North America.

Sales in the Utility Support Structures rose roughly 16.2% year over year to $243.9 million, supported by sales of solar tracker structures from the Convert Italia buyout. Pricing actions also drove the top line.

Sales in the Coatings segment rose 2.2% year over year to $86.8 million. Per the company, sales generated from the recent acquisitions along with pricing actions boosted sales in the segment.

Agriculture-Related

Sales in the Irrigation unit amounted to $152.8 million, down around 18.7% year over year. Sales in North America were $108.5 million, lower than $109.9 million in the year-ago quarter.

Financial Position

Valmont ended the first quarter with cash and cash equivalents of $211.2 million, down roughly 56% year over year. Long-term debt at the end of the year was $741.6 million.

Outlook

The company has narrowed earnings per share expectation for 2019 to the range of $8.30-$8.90, from $8.10-$8.90.

It continues to expect revenue growth of 7-8% year over year in 2019. Capital spending for the year is unchanged from prior forecast of $90-$100 million.
 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

At this time, Valmont has a poor Growth Score of F, however its Momentum Score is doing a lot better 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Valmont has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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