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Higher Aggregate Shipments to Aid Vulcan's (VMC) Q4 Earnings

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Vulcan Materials Company (VMC - Free Report) is scheduled to release fourth-quarter 2019 results on Feb 18, before the opening bell.

In the last reported quarter, the company’s adjusted earnings of $1.68 per share missed the Zacks Consensus Estimate by 1.2% but revenues of $1,418.8 million outpaced the consensus mark by 3.7%. On a year-over-year basis, earnings and revenues improved 20% and 14.4%, respectively, given solid shipment growth and strong pricing in the aggregates business. Also, robust growth in public construction demand and continued improvement in private demand added to the positives.

Vulcan reported better-than-expected earnings in three of the last four quarters, with the average positive surprise being 13.5%.

Trend in Estimate Revision

The Zacks Consensus Estimate for earnings per share for the quarter to be reported has been downwardly revised by 2.6% over the past seven days to $1.12. Nonetheless, this indicates an increase of 13.1% from the year-ago quarter. The consensus estimate for revenues is pegged at $1.19 billion, suggesting 9.5% year-over-year growth.

Vulcan Materials Company Price and EPS Surprise

Vulcan Materials Company Price and EPS Surprise

Vulcan Materials Company price-eps-surprise | Vulcan Materials Company Quote

Factors at Play

Vulcan is expected to have generated higher fourth-quarter earnings, given solid underlying demand from infrastructural projects. Notably, public sector spending — which is less affected by general economic cycles and deemed much more stable than private sector spending — is expected to have led to higher year-over-year revenues underpinned by increased spending by federal, state and local governments for the construction of highways, bridges, airports, dams, roads and other infrastructure construction.

Publicly-funded construction accounts for significant part (approximately 45-55%) of Vulcan Materials’ total aggregate shipments and its Aggregates business (including crushed stone, sand and gravel, and sand and other aggregates) has been a major contributor to revenue growth. Strong aggregate shipments and pricing, underpinned by growing public demand and operational discipline, are likely to have aided fourth-quarter revenues.

Additionally, efforts to enhance operational excellence, acquisition synergies and cost-control measures are expected to have aided its bottom line.

Key Projections

The Zacks Consensus Estimate for Aggregates segment sales is pegged at $989 million, suggesting an increase of 13.2% from a year ago. For the Asphalt segment, the consensus estimate for sales is pegged $206 million, which implies 10.8% year-over-year growth. Meanwhile, the consensus mark for Concrete segment revenues is pegged at $101 million, implying 8.6% year-over-year improvement. The same for Calcium segment revenues is $2 million, pointing to 1.5% growth from $1.97 million a year ago.

Quantitative Model Prediction

Our proven model does not conclusively predict an earnings beat for Vulcan this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Currently, it has a Zacks Rank #3 and an Earnings ESP of -3.13%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Peer Release

Martin Marietta Materials, Inc. (MLM - Free Report) reported fourth-quarter 2019 adjusted earnings per share of $2.09, missing the Zacks Consensus Estimate of $2.18 by 4.1%. However, the reported figure increased an impressive 39.3% from the year-ago level of $1.50 per share.

Stocks With Favorable Combination

Here are a few construction stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming releases:

Installed Building Products, Inc. (IBP - Free Report) has an Earnings ESP of +3.09% and a Zacks Rank #2.

Aspen Aerogels, Inc. (ASPN - Free Report) has an Earnings ESP of +25.00% and carries a Zacks Rank #3.

5 Stocks Set to Double

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Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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