Vulcan Materials Company (VMC) is set to report the third-quarter 2014 results on Nov 4, before the opening bell. Last quarter, the company delivered in-line earnings.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Vulcan Materials witnessed a sharp increase in aggregates demand from the second half of 2013 due to an increase in private construction demand in Vulcan’s served states of Florida, Texas, California, Georgia and Arizona. Although construction activity and aggregates consumption remain below historical levels, the company’s aggregate shipments have increased year over year for five consecutive quarters in the second quarter of 2014.
In fact, Vulcan Material raised the full-year 2014 aggregates shipments guidance during the second-quarter conference call following healthy volumes in the first half of the year.
However, while the company witnessed strong trends in private construction — residential and non-residential —, public spending continues to lag.
Management noted that non-residential construction (such as office, commercial buildings and shopping centers) has improved in 2014 and is expected to show further strength through the rest of the year and 2015. Additionally, in the public construction end market, large transportation projects and growing contract work for highways are expected to contribute modestly to volume growth.
In August, Vulcan Materials acquired a quarry in Oklahoma with rail connectivity to Texas and a couple of distribution yards in Dallas from Martin Marietta Materials, Inc. (MLM). Vulcan has been reporting over 15% increase in aggregate volume in the Texas market for the past few quarters. These acquisitions will further strengthen the company’s aggregates business in this lucrative market.
Earnings Whispers?
Our proven model does not conclusively show that Vulcan Materials is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.
Zacks ESP: The Earnings ESP is 0.00%.
Zacks Rank: Vulcan Materials’ Zacks Rank #1 (Strong Buy) when combined with a 0.00% ESP, makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Some stocks that have both a positive Earnings ESP and a favorable Zacks Rank are:
Eagle Materials, Inc. (EXP), with an Earnings ESP of +0.99% and a Zacks Rank #3 (Hold).
The J. M. Smucker Company (SJM), with an Earnings ESP of +1.21% and a Zacks Rank #3.
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