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Why Is Valmont (VMI) Down 3.3% Since Last Earnings Report?
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A month has gone by since the last earnings report for Valmont Industries (VMI - Free Report) . Shares have lost about 3.3% 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 its most recent earnings report in order to get a better handle on the important drivers.
Valmont Misses on Q2 Earnings & Sales, Lowers FY19 View
Valmont registered profits of roughly $41.4 million or $1.90 per share in second-quarter 2019, up around 26% from roughly $33 million or $1.46 in the year-ago quarter.
The bottom line in the reported quarter includes pre-tax expenses of roughly $6 million ($4.3 million post-tax) associated with specific non-recurring items affecting the company’s Utility Support Structures and Coatings segments.
Barring one-time items, adjusted earnings in the reported quarter came in at $2.10 per share which lagged the Zacks Consensus Estimate of $2.24.
Revenues in the quarter were $700.9 million, up roughly 3% year over year, driven by strong demand in transportation and wireless communication, contributions from acquisitions and favorable pricing across the company’s portfolio. The figure, however, missed the Zacks Consensus Estimate of $726 million.
Segment Highlights
Infrastructure-Related
Sales in the Engineered Support Structures segment totaled $258.7 million, up around 3% year over year. Sales were driven by higher volumes in North America, favorable pricing and acquisitions.
Sales in the Utility Support Structures rose roughly 6% year over year to $209.8 million, driven by sales from acquisitions and favorable pricing in bid markets.
Sales in the Coatings segment rose around 7% year over year to $98.4 million on the back of higher sales across all regions, supported by recent acquisitions and pricing discipline.
Agriculture-Related
Sales in the Irrigation unit amounted to $155.2 million, down around 5% year over year. Sales in North America were $102.8 million, down around 10% from the year-ago quarter.
Per the company, sustained low net farm income and unfavorable weather conditions are affecting farmer sentiment and demand. Pricing, better product mix and higher technology sales were masked by lower volumes.
International irrigation sales rose around 7% year over year to $52.4 million, supported by stronger demand across Brazil and the EMEA, partly offset by unfavorable currency swings.
Financial Position
Valmont ended the quarter with cash and cash equivalents of $256.9 million, down roughly 64% year over year. Long-term debt at the end of the quarter was $765.6 million, down around 23% year over year.
Operating cash flow for the second quarter was $105 million.
The company bought back 236,300 shares for $28.9 million in the reported quarter.
Outlook
The company has lowered earnings per share expectation for 2019 to the range of $8.10-$8.70 from $8.30-$8.90 factoring in non-recurring expenses recognized in the second quarter.
Valmont now expects revenue growth of 6-7% year over year in 2019 (down from prior growth expectations of 7-8%) considering lower international irrigation demand and a stronger U.S. dollar. Capital spending guidance for the year is unchanged from prior forecast of $90-$100 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Valmont has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Valmont has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Valmont (VMI) Down 3.3% Since Last Earnings Report?
A month has gone by since the last earnings report for Valmont Industries (VMI - Free Report) . Shares have lost about 3.3% 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 its most recent earnings report in order to get a better handle on the important drivers.
Valmont Misses on Q2 Earnings & Sales, Lowers FY19 View
Valmont registered profits of roughly $41.4 million or $1.90 per share in second-quarter 2019, up around 26% from roughly $33 million or $1.46 in the year-ago quarter.
The bottom line in the reported quarter includes pre-tax expenses of roughly $6 million ($4.3 million post-tax) associated with specific non-recurring items affecting the company’s Utility Support Structures and Coatings segments.
Barring one-time items, adjusted earnings in the reported quarter came in at $2.10 per share which lagged the Zacks Consensus Estimate of $2.24.
Revenues in the quarter were $700.9 million, up roughly 3% year over year, driven by strong demand in transportation and wireless communication, contributions from acquisitions and favorable pricing across the company’s portfolio. The figure, however, missed the Zacks Consensus Estimate of $726 million.
Segment Highlights
Infrastructure-Related
Sales in the Engineered Support Structures segment totaled $258.7 million, up around 3% year over year. Sales were driven by higher volumes in North America, favorable pricing and acquisitions.
Sales in the Utility Support Structures rose roughly 6% year over year to $209.8 million, driven by sales from acquisitions and favorable pricing in bid markets.
Sales in the Coatings segment rose around 7% year over year to $98.4 million on the back of higher sales across all regions, supported by recent acquisitions and pricing discipline.
Agriculture-Related
Sales in the Irrigation unit amounted to $155.2 million, down around 5% year over year. Sales in North America were $102.8 million, down around 10% from the year-ago quarter.
Per the company, sustained low net farm income and unfavorable weather conditions are affecting farmer sentiment and demand. Pricing, better product mix and higher technology sales were masked by lower volumes.
International irrigation sales rose around 7% year over year to $52.4 million, supported by stronger demand across Brazil and the EMEA, partly offset by unfavorable currency swings.
Financial Position
Valmont ended the quarter with cash and cash equivalents of $256.9 million, down roughly 64% year over year. Long-term debt at the end of the quarter was $765.6 million, down around 23% year over year.
Operating cash flow for the second quarter was $105 million.
The company bought back 236,300 shares for $28.9 million in the reported quarter.
Outlook
The company has lowered earnings per share expectation for 2019 to the range of $8.10-$8.70 from $8.30-$8.90 factoring in non-recurring expenses recognized in the second quarter.
Valmont now expects revenue growth of 6-7% year over year in 2019 (down from prior growth expectations of 7-8%) considering lower international irrigation demand and a stronger U.S. dollar. Capital spending guidance for the year is unchanged from prior forecast of $90-$100 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Valmont has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Valmont has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.