Vulcan Materials Rides on Strong Aggregate Demand
On Sep 24, we issued an updated research report on construction materials maker Vulcan Materials Company (VMC).
On Aug 5, the company reported mixed second-quarter results. Second-quarter earnings of 37 cents soared 185% year over year and were in line with the Zacks Consensus Estimate driven by solid aggregates volume growth and improved margins. Total revenue beat the Zacks Consensus Estimate by 8.2% and grew 7% year over year owing to higher aggregate shipments and pricing and improving results in the other segments.
Aggregates shipments rose 10% in the quarter due to strength in private construction, better weather conditions and easy year-ago comparisons. Strong trends in private construction — both residential and non-residential — continued to lead aggregates volume growth.
Vulcan Materials’ aggregate shipments have increased year over year for five consecutive quarters as it sees strength inprivate construction demand in key markets like Florida, Texas, California, Georgia and Arizona.
In fact, healthy aggregate volumes in the first half propelled management to raise its full-year volume outlook.
Moreover, the company enjoys strong fundamentals including its strong aggregate reserve positions, continued profit improvements, divestitures of non-strategic operations and significant debt reduction.
However, the company has limited visibility on growth in aggregate demand in public construction, including highways and other infrastructure projects. Further, though the current federal highway bill has been extended till May, there still remains uncertainty around long-term highway construction funding.
Other Stocks to Consider
Vulcan Materials carries a Zacks Rank #3 (Hold). Other stocks in the building and related sectors worth considering include The Home Depot, Inc. (HD), PGT, Inc. (PGTI) and United Rentals, Inc. (URI). All the three stocks carry a Zacks Rank #2 (Buy).
Read the Full Research Report on VMC
Read the Full Research Report on HD
Read the Full Research Report on URI
Read the Full Research Report on PGTI
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