Construction Stocks Earnings on Feb 22: TOL, SUM, UFPI
Zacks Equity Research
Updated
The fourth-quarter earnings season is on its last leg with 92.3% construction companies in the S&P 500 cohort already having released quarterly results. According to the latest Earnings Preview, 58.3% of the companies have surpassed earnings estimates while 66.7% beat revenue expectations. Total earnings at these construction companies increased 9.3% and total revenue rose 8.1%.
The U.S. homebuilding market staged a striking comeback in Dec 2016, and the housing market is likely to have contributed to economic growth in the fourth quarter. Positives like a healthier economy, improving employment levels, positive consumer confidence and a tight supply situation raise optimism about the sector’s performance in 2017.
Some of the leading companies in the construction sector have reported their quarterly results so far. D.R. Horton, Inc. DHI exhibited an impressive performance in the first quarter of fiscal 2017, with earnings and revenues beating the Zacks Consensus Estimate by 17% and 6.8%, respectively. Masco Corporation’s MAS reported fourth-quarter, wherein earnings missed analysts’ expectations by 2.9% but revenues surpassed estimates by 0.6%. Vulcan Materials Company’s VMC adjusted earnings and revenues lagged the Zacks Consensus Estimate by 16.8% and 4.6%, respectively.
With more companies likely to report their quarterly results over the next few days, let us take a look at how these three construction companies are placed ahead of their earnings release on Feb 22.
Toll Brothers Inc. TOL, which is a primary builder of single-family detached and attached home communities, is scheduled to report first-quarter fiscal 2017 results, before the opening bell.
Last quarter, the company posted a negative earnings surprise of 31.6%. Also, it missed estimates in three of the last four quarters and has an average negative surprise of 7.35%.
Our proven model does not conclusively show that Toll Brothers is likely to beat estimates this time as it has an Earnings ESP of 0.00% (both Most Accurate estimate and Zacks Consensus Estimate are pegged at 35 cents) and a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Per our model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 to beat earnings.
Please note that we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Toll Brothers Inc. Price and EPS Surprise
Toll Brothers Inc. Price and EPS Surprise | Toll Brothers Inc. Quote
For the fiscal first quarter, the Zacks Consensus Estimate for earnings is pegged at 35 cents, reflecting a year-over-year decrease of 12.5%. Our estimate for revenues stands at $885.02 million, implying a 4.7% decline.
Summit Materials, Inc. SUM, a leading vertically integrated construction materials company, is slated to report fourth-quarter 2016 numbers, before the market opens.
In the preceding quarter, the company’s earnings were in line with our expectations. The company surpassed earnings in three of the preceding four quarters with an average beat of 9.45%.
Our proven model shows that Summit is likely to beat on earnings because it has the perfect combination of an Earnings ESP of +8.70% and a Zacks Rank #3 (Hold).
This is because the company’s Most Accurate estimate stands at 25 cents and the Zacks Consensus Estimate is pegged at 23 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Also, the company’s Zacks Rank #3 increases the predictive power of ESP.
Summit Materials, Inc. Price and EPS Surprise
Summit Materials, Inc. Price and EPS Surprise | Summit Materials, Inc. Quote
However, for the fourth quarter, the Zacks Consensus Estimate for earnings is pegged at 23 cents, reflecting a decline of 32.3% year over year. The consensus mark for revenues is pegged at $403.73 million, indicating a 12.3% year-over-year decline.
Universal Forest Products, Inc. UFPI manufactures, treats and distributes lumber products. It is scheduled to report fourth-quarter 2016 results, after the market closes.
Last quarter, the company posted a negative earnings surprise of 6.8%. However, it surpassed estimates in three out of the last four quarters and has an average positive surprise of 8.87%.
Our proven model does not conclusively indicate an earnings beat for Universal Forest as it has an Earnings ESP of 0.00% (both Most Accurate estimate and Zacks Consensus Estimate stand at $1.00) and a Zacks Rank #3.
Universal Forest Products, Inc. Price and EPS Surprise
Universal Forest Products, Inc. Price and EPS Surprise | Universal Forest Products, Inc. Quote
For the fourth quarter, the Zacks Consensus Estimate for earnings is pegged at $1.00, reflecting a 7.5% year-over-year increase. Our estimate for revenues stands at $705.08 million, down 7.9%.
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