Vulcan Materials (VMC) Q1 Earnings: What's In The Cards?

Vulcan Materials Company (NYSE:VMC) is set to release first-quarter 2017 financial numbers before the opening bell on May 10.

In the last reported quarter, the company had posted a negative 16.87% earnings surprise. Notably, the company surpassed the Zacks Consensus Estimate in only one of the last four quarters which more than offset the three earnings miss. This resulted in an average earnings beat of 73.94%.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

Tough comps accompanied with spending delays with respect to large projects are likely to be the headwinds in the to-be-reported quarter for Vulcan, the largest producer of construction aggregates in the U.S. Solid first quarter of 2016 shipments make comparisons difficult for the to-be-reported quarter. In fact, the company is witnessing continued volume weakness in California, Illinois, and coastal Texas businesses.

However, following the soft first quarter, the company expects these headwinds to subside and improvements to accelerate in the back half of the year.

Again, sustained growth in private construction activity improves the demand for both the aggregates as well as non-aggregates businesses of Vulcan. With a warmer winter this year, the company is expected to witness higher aggregate sales. Further, the prospects for higher funding levels and easy regulatory environment may prove beneficial for the company with respect to idled projects.

Along with this, the company’s aggressive cost-control initiatives, strong aggregate reserve position, pricing power, divestiture of non-strategic operations and significant debt reduction are likely to contribute in the first quarter.

For the first quarter, the Zacks Consensus Estimate for earnings is pegged at 22 cents per share, reflecting a decrease of 16.4% year over year, while the consensus for revenues is $756.4 million, implying a marginal 0.2% year-over-year growth.

Earnings Whispers

Our proven model does not conclusively show that Vulcan is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP is -22.73% as the Most Accurate estimate of 17 cents per share is lower than the Zacks Consensus Estimate of 22 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Vulcan carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Peer Releases

Martin Marietta Materials, Inc.'s (NYSE:MLM) first-quarter 2017 adjusted earnings per share of 67 cents surpassed the Zacks Consensus Estimate of 66 cents by 1.5%. However, earnings declined 2.9% from the prior-year quarter.

Masco Corporation’s (NYSE:MAS) adjusted earnings of 41 cents per share in the first quarter of 2017 surpassed the Zacks Consensus Estimate of 35 cents by 17.1%. Adjusted earnings increased 28.1% year over year.

D.R. Horton, Inc. (NYSE:DHI) exhibited an impressive performance in the second quarter of fiscal 2017, with both earnings and revenues beating the Zacks Consensus Estimate by 1.7% and 5.2%, respectively.

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