Key Predictions for Q3 Earnings Reports of ROCK, IBP & USCR

We are well past the half-way mark of the Q3 reporting cycle, with more than 327 S&P 500 companies having already reported results till Nov 1. These companies account for 71.2% of the index’s total market capitalization, with 74.9% topping EPS (earnings per share) estimates and 65.7% coming in ahead of top-line expectations.

We currently anticipate that earnings and revenues of all the S&P 500 stocks would be up 5.6% and 5.5%, respectively, on a year-over-year basis.

While reckoning the performance of construction stocks, we believe positives like elevated infrastructure spending in the United States, heightened rebuilding activities (thanks to two major hurricanes), an upbeat job market picture, improving consumer confidence and the recovering Chinese economy are likely to bolster near-term results.

We note that the Construction sector is currently placed at the top 44% out of the 16 Zacks Sectors. This sector has also been outperforming the S&P 500 market in recent times. Notably, in the last three months, the sector has recorded around 10.3% growth, above the S&P 500 index’s growth of 4.1%.

Our latest Earnings Outlook (dated Nov 1, 2017) states that roughly 53.8% of the Construction stocks in the S&P 500 group have reported results for this quarter, recording 19.2% rise in earnings and 16.7% upside in revenues on a year-over-year basis.

We project that both earnings and revenues of all the construction stocks in the S&P 500 Group would increase 9.1% and 10.1%, respectively, on a year-over-year basis.

What’s in Store for These 3 Construction Stocks?

Gibraltar Industries, Inc. ROCK is scheduled to report third-quarter 2017 results on Nov 3, before the market opens. The company generated an average positive earnings surprise of 9.38% over the past four quarters. However, we cannot conclusively predict that Gibraltar Industries will likely beat estimates in this quarter. That is because a stock should have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for an earnings beat.

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

That is not the case here as we will see below:

Gibraltar Industries’ Earnings ESP is 0.00%, as the Most Accurate estimate of 54 cents is in line with the Zacks Consensus Estimate. Though the company carries a favorable Zacks Rank #3, we also need to have a positive ESP to be confident of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Installed Building Products, Inc. IBP is slated to report its numbers, before the market opens. The company recorded an average positive earnings surprise of 0.67% over the trailing four quarters.

For the to-be-reported quarter, we predict that Installed Building Products’ earnings will likely beat estimates. The company carries a favorable Zacks Rank #3 and has an Earnings ESP of +3.61%. The stock’s Most Accurate estimate of 67 cents per share is higher than the Zacks Consensus Estimate of 65 cents.

For the quarter under review, we cannot conclusively predict that U.S. Concrete’s earnings will likely beat estimates. The company carries a favorable Zacks Rank #3 but an Earnings ESP of 0.00% makes surprise predictions inconclusive. The Most Accurate estimate of $1.43 per share comes in line with the Zacks Consensus Estimate.

However, we notice that the Zacks Consensus Estimate for the company’s third-quarter aggregate sales volume is currently pegged at $1,728 million, higher than $1,529 million reported in the preceding quarter. Also, the Zacks Consensus Estimate for the company’s ready-mixed Concrete segment’s quarterly revenues is pegged at $338 million, higher than $310 million reported in the prior quarter.

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