HomeMost PopularInvestingValmont Industries, Inc. Outperforms Q4 Earnings Projections, Yet Falters in Revenue

Valmont Industries, Inc. Outperforms Q4 Earnings Projections, Yet Falters in Revenue

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Valmont Industries, Inc. (VMI) has released its financial report for the fourth quarter of 2023, showcasing adjusted earnings per share of $3.18. While this figure represents a decline from $3.57 during the equivalent period in the previous year, it still managed to surpass the Zacks Consensus Estimate of $3.08. The company’s success in bolstering its gross profit margins in the quarter through effective pricing strategies and operational efficiencies deserves a nod, albeit amidst lowering volumes. On the flip side, the firm’s revenues for the same quarter amounted to $1,015.5 million, marking a 10.3% decline compared to the previous year and falling short of the Zacks Consensus Estimate of $1,037.6 million.

Managing the Segments

The Infrastructure segment’s revenues for the fourth quarter slightly fell short of the estimates, amounting to $748.3 million. Even though this represents a 3% decrease from the previous year, higher volumes in specific product lines and favorable pricing helped to cushion the impact of the decline. Conversely, the Agriculture segment faced a more significant hit, with revenues totaling $271.6 million, reflecting an 18.9% decrease compared to the prior year. This underperformance was further compounded by a significant miss on the estimated revenues, totaling $320.6 million. North America witnessed a drop in irrigation equipment volumes, attributing the decline to the lack of a prolonged backlog that had buoyed the fourth quarter of 2022.

Financial Landscape

Financially, the company generated $210 million in free cash flow throughout 2023, a testament to its earnings and prudent working capital management. At the end of 2023, Valmont Industries, Inc. had $203 million in cash and cash equivalents. The company steered its capital allocation strategy to repurchase $178.6 million worth of company stock, encompassing the $120 million Accelerated Share Repurchase program. As the year closed, VMI still had $136.1 million in reserves from the authorized share repurchase program.

Projections and Price Performance

For 2024, Valmont anticipates a net sales variation to range between -3% to flat, with an expected EPS of $14.25-$15.5. The company also frames anticipated capital expenditures within the $125-$140 million bracket for 2024, assuming an effective tax rate of 26%. Interestingly, VMI shares have witnessed a 23.9% slump over the past year, faring worse than the industry’s 15.1% decrease during the same period.

Recommendations and Stock Performance

Valmont currently holds a Zacks Rank #2 (Buy). Other prominent stocks in the basic materials space include United States Steel Corporation (X), Carpenter Technology Corporation (CRS), and Alpha Metallurgical Resources Inc. (AMR). United States Steel boasts a Zacks Rank #1 (Strong Buy) with a solid track record of consistently beating the Zacks Consensus Estimate over the last four quarters, with an average earnings surprise of 54.8%. The company’s shares have surged by a staggering 62.7% in the past year. Meanwhile, Carpenter Technology currently holds a Zacks Rank #1, having exceeded the Zacks Consensus Estimate in three of the last four quarters while matching it once, yielding an average earnings surprise of 12.2%. The company’s shares witnessed a commendable surge of 33.7% in the past year. Alpha Metallurgical Resources Inc. has seen a 69% upward revision in the Zacks Consensus Estimate for its current-year earnings over the past 60 days and currently holds a Zacks Rank #1. Over the past year, AMR shares have seen a meteoric rise of approximately 128.8%.

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