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Vulcan Materials (VMC) to Post Q1 Earnings: What's in Store?

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Vulcan Materials Company (VMC - Free Report) is scheduled to release first-quarter 2020 results on May 6, before the opening bell.

In the last reported quarter, the company’s adjusted earnings and revenues missed the Zacks Consensus Estimate by 3.6% and 0.4%, respectively. However, on a year-over-year basis, earnings and revenues improved 9.1% and 9%, respectively.

Vulcan reported better-than-expected earnings in two of the last four quarters, with the average positive surprise being 9.2%.

Trend in Estimate Revision

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share has been downwardly revised by 14.6% over the past 30 days to 41 cents. This indicates a decrease of 10.9% from the year-ago quarter. The consensus estimate for revenues is pegged at $1.01 billion, suggesting 1.1% 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 to Note

Vulcan Materials — similar to other aggregate producers like Summit Materials, Inc. (SUM - Free Report) , Martin Marietta (MLM - Free Report) and Eagle Materials Inc. (EXP - Free Report) — is expected to have generated soft revenues and lower year-over-year earnings in the first quarter, given strong first-half 2020 comparisons and reduced state DOT spending. Its business and earnings are sensitive to changes in construction spending, particularly housing and public construction in the Southeast, Texas, and California.

Notably, publicly-funded construction accounts for significant part (approximately 45-55%) of Vulcan Materials’ total aggregate shipments. The Aggregates business (including crushed stone, sand and gravel, and sand and other aggregates) has been a major contributor to revenue growth. The slowing of highway contract awards, difficult comparisons, uncertainty around state DOTs funding and soft non-residential housing activity are expected to have weighed on its first-quarter earnings. Again, higher repair and maintenance costs added to the woes.

Nonetheless, efforts to enhance operational excellence, acquisition synergies and cost-control measures are expected to have aided the bottom line to some extent.

Key Projections

The Zacks Consensus Estimate for Aggregates segment sales is pegged at $842 million, suggesting an increase of 0.8% from a year ago but a 12.3% sequential decrease. For the Asphalt Mix segment, the consensus estimate for sales is pegged $138 million, which implies 4.5% year-over-year growth but a 33% sequential decrease. The consensus mark for Concrete segment revenues is pegged at $86 million, implying a 2.3% year-over-year improvement but 9.5% sequential decrease. The same for Calcium segment revenues is $1.5 million, pointing to no change on a year-over-year basis but a decline from $2.12 million in the fourth quarter.

Quantitative Model Prediction

Our proven model predicts an earnings beat for Vulcan Materials 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. This is exactly the case here as you will see below.

Earnings ESP: Its Earnings ESP is +0.49%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Vulcan Materials currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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