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Vulcan Materials (VMC) Q3 Earnings: Will It Disappoint?

Vulcan Materials Company VMC is set to release third-quarter 2017 results, before the opening bell on Nov 2.

Last quarter, the company had delivered a positive earnings surprise of 16.87%. Notably, the company surpassed the Zacks Consensus Estimate in only one of the last four quarters, which more than offset the earnings misses. This resulted in an average earnings beat of 0.41%.

Vulcan Materials Company Price and EPS Surprise



Vulcan is susceptible to bad weather conditions as most of its products are used outdoors in the public or private construction industry. Also, the company’s production and distribution facilities are located in the open. Inclement weather conditions affect the company’s ability to produce and distribute products as well as demand.

Aggregates shipments declined 2% in the first six months of 2017 owing to adverse weather conditions. The recent hurricanes will likely cause shipment delays in the third quarter. Nevertheless, increased demand for building materials for the repair of damaged properties will likely offset the initial concerns regarding business delays.The Zacks Consensus Estimate for aggregates shipments is pegged at 50, 776 tons for the third quarter, up 1% year over year.

Meanwhile, our proven model does not conclusively show an earnings beat for Vulcan this quarter. This 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 -7.19%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Vulcan has a Zacks Rank #5 (Strong Sell). Note that we caution against stocks with a Zacks Rank #4 (Sell) or 5 going into the earnings announcement, especially when the company is seeing negative estimate revision.

Earnings estimates for the third quarter have moved down 15.4% over the last 30 days, reflecting analysts’ concerns. Currently, the Zacks Consensus Estimate for earnings is pegged at 93 cents, reflecting a decline of 7.7% year over year.

Nonetheless, the company’s aggressive cost-control initiatives, strong aggregate reserve position and pricing power are likely to drive results in the third quarter. Also, sustained growth in private construction activity is expected to bode well for demand of both the aggregates and non-aggregates business lines. For the third quarter, the consensus estimate for revenues is pegged at $1.06 billion, up 4.7% year over year.

Stocks Worth a Look

Here are a few construction stocks worth considering as they have the right combination of elements to beat earnings.

Potlatch Corporation PCH has an Earnings ESP of +5.36% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Owens Corning Inc OC has an Earnings ESP of +0.03% and a Zacks Rank #2.

Louisiana-Pacific Corporation LPX has an Earnings ESP of +3.90% and a Zacks Rank #1.

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Vulcan Materials Company (VMC): Free Stock Analysis Report
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