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Construction Stock Q1 Earnings Due on Apr 29: SHW, MAS & More

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The Zacks Construction sector has performed pretty well so far this earnings season, backed by robust housing market dynamics and increased public sector construction activity.

In most part of the quarter, the residential construction space witnessed solid demand on lower interest rates and mortgage loans, reduced construction costs, low unemployment, along with improved affordability.

Increased number of project awards across multiple business segments and strong pricing are likely to have contributed to growth in the quarter. However, prevailing headwinds like higher land and labor costs, and shortage of home supplies might have offset the positives.

Per the latest Earnings Preview, construction sector earnings are expected to grow 16.9% in the first quarter compared with 9.6% growth in fourth-quarter 2019. Revenues are projected to increase 11.9% versus 3.1% growth in the prior quarter.

Some notable construction companies like PulteGroup, Inc. (PHM - Free Report) and Armstrong World Industries, Inc. (AWI - Free Report) recently reported strong first-quarter 2020 numbers. Another handful of companies from the same space are likely to release their respective quarterly numbers this week.

The coronavirus outbreak, whose impact was felt in the latter part of March, affected companies' business operations and demand for homes. In fact, a few builders experienced weakening business conditions and intensified order cancellation in late March, stretching into April. General market uncertainties arising from the pandemic are expected to reflect on the quarterly results to some extent.

A Handful of Construction Stocks to Watch

Let’s take a quick glance at how the following construction stocks are poised ahead of their first-quarter earnings releases on Apr 29.

According to the Zacks model, 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The Sherwin-Williams Company (SHW - Free Report) is slated to report quarterly results before the opening bell. In the last reported quarter, earnings and revenues lagged the Zacks Consensus Estimate by 3% and 1.7%, respectively. The company reported better-than-expected results in two of the last four quarters, with the average positive earnings surprise being 0.7%, as shown in the chart below:

The Sherwin-Williams Company Price and EPS Surprise

However, our proven model does not conclusively predict an earnings beat for the company as it has an Earnings ESP of -3.96% despite a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

For the quarter to be reported, the Zacks Consensus Estimate for earnings has declined 1.5% to $4.01 per share over the past 30 days. This indicates a 11.4% increase from the year-ago earnings of $3.60 per share. The consensus mark for revenues is $4.09 billion, suggesting an increase of 1.2% year over year (read more: Sherwin-Williams to Post Q1 Earnings: What's in Store?).

Masco Corporation (MAS - Free Report) is slated to report quarterly results before the opening bell. In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 1.9% but revenues missed the same by 0.9%. Its earnings topped analysts’ expectations in two of the last four quarters, with the average positive surprise being 0.3%, as shown in the chart below:

Masco Corporation Price and EPS Surprise

The chances of Masco delivering an earnings beat are high this time around as it has an Earnings ESP of +10.73% and a Zacks Rank #3.

For the quarter to be reported, the Zacks Consensus Estimate for earnings has declined 2.7% to 36 cents per share in the past 60 days. The estimated figure implies a 18.2% year-over-year decline. The consensus estimate for revenues is $1.52 billion, pointing to 20.3% year-over-year fall. (Read more: Lower Volume & Tariffs to Hurt Masco's Q1 Earnings)

United Rentals, Inc. (URI - Free Report) is slated to report quarterly results after the opening bell. Fourth-quarter 2019 earnings and revenues surpassed the Zacks Consensus Estimate by 5.3% and 2.7%, respectively. Its earnings surpassed the consensus estimate in each of the last four quarters, with the average surprise being 6.8%, as shown in the chart below:

United Rentals, Inc. Price and EPS Surprise

Unlike Masco, the chances of United Rentals delivering an earnings beat in the first quarter are low as it has an Earnings ESP of -23.81% and a Zacks Rank #4 (Sell).

For the quarter to be reported, the Zacks Consensus Estimate for earnings has been downwardly revised over the past 30 days to $3.05 per share. The estimated figure indicates a 7.9% decrease from the year-ago earnings. The Zacks Consensus Estimate for revenues is pegged at $2.14 billion, suggesting 1.1% year-over-year growth. (Read more: What's in the Cards for United Rentals' Q1 Earnings?)

Owens Corning (OC - Free Report) is slated to report quarterly results before the opening bell. Fourth-quarter 2019 earnings and revenues topped the Zacks Consensus Estimate by 1.8% and 0.6%, respectively. Its earnings surpassed the consensus estimate in three of the last four quarters, with the average positive surprise being 5.5%, as shown in the chart below:

Owens Corning Inc Price and EPS Surprise

Our proven model predicts an earnings beat for the company as it has an Earnings ESP of +3.11% and a Zacks Rank #3.

For the quarter to be reported, the Zacks Consensus Estimate for earnings has been downwardly revised over the past 30 days to 56 cents per share. The estimated figure indicates a 3.7% increase from the year-ago earnings. The Zacks Consensus Estimate for revenues is pegged at $1.65 billion, suggesting a 1% year-over-year decline.

Rayonier Inc. (RYN - Free Report) is slated to report quarterly results after the opening bell. In the last reported quarter, earnings topped the Zacks Consensus Estimate by 20% but revenues missed the same by 5.9%. Its earnings surpassed the consensus estimate in three of the last four quarters, with the average positive surprise being 6.7%, as shown in the chart below:

Rayonier Inc. Price and EPS Surprise

Similar to Owens Corning, the chances of Rayonier delivering an earnings beat are high this time around as it has an Earnings ESP of +5.00% and a Zacks Rank #3.

For the quarter to be reported, the Zacks Consensus Estimate for earnings has been downwardly revised over the past 30 days to 3 cents per share. The estimated figure indicates a 84.2% decrease from the year-ago period. The Zacks Consensus Estimate for revenues is pegged at $165.55 million, suggesting 13.6% year-over-year fall.

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