Construction Stocks' Earnings Due on Aug 6: PWR, KBR & More
The Zacks Construction sector started the earnings season on a positive note, unlike most of the other sectors, backed by robust housing market dynamics despite coronavirus-led market disruptions.
Solid demand through most part of the second quarter in the residential construction space owing to lower borrowing costs is expected to have aided the companies’ top lines.
A number of project awards across multiple business segments — including communications, transmission and power, along with infrastructural projects in domestic as well as international markets — also contributed significantly. Again, increasing defense spending in major economies like the United States, rising public investment in water infrastructure and utility plants, as well as encouraging prospects in the healthcare market are expected to have acted as tailwinds.
However, higher land and labor costs, along with the shortage of home supplies might have offset the positives. Record low inventory level has been deterring prospective buyers, especially first-timers. Furthermore, widespread slowdown in economic activity owing to the coronavirus outbreak might have weighed on the companies’ profitability. Overall, slowdown in traffic and sales, along with project delays and cancellations are expected to reflect on Q2 results.
Overall Prediction
Per the latest Earnings Preview, construction sector earnings are expected to grow 2.6% for the second quarter compared with 13.4% growth in first-quarter 2020. However, revenues are projected to decrease 2.1% against 12.1% growth in the prior quarter.
Notable Recent Releases
Some notable construction companies like Jacobs Engineering Group Inc. J, Vulcan Materials Company VMC and Weyerhaeuser Company recently released quarterly numbers.
Jacobs reported third-quarter fiscal 2020 (ended Jun 26, 2020) results, wherein earnings and revenues beat the respective Zacks Consensus Estimate, courtesy of solid project execution.
Vulcan reported impressive results for second-quarter 2020. Both the top and bottom lines surpassed the Zacks Consensus Estimate, backed by solid operational execution despite some disruptions in construction activity during the quarter.
Weyerhaeuser reported impressive second-quarter 2020 results, wherein earnings and revenues comfortably surpassed the Zacks Consensus Estimate. The company delivered strong performance across businesses despite COVID-19 impacts.
Construction Stocks to Watch
Let’s take a quick glance at how the following construction stocks are poised ahead of their quarterly earnings releases on Aug 6.
Our proven model shows that companies with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP have higher chances of beating earnings estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Quanta Services, Inc. PWR is slated to report second-quarter 2020 results before the opening bell. In the last reported quarter, the company’s earnings met the Zacks Consensus Estimate but revenues missed the same by 0.04%. In fact, Quanta’s earnings topped the consensus mark in two of the last four quarters, missed once and met on another occasion, with the average negative surprise being 10.7%, as shown in the chart below:
Quanta Services, Inc. Price and EPS Surprise
Quanta Services, Inc. price-eps-surprise | Quanta Services, Inc. Quote
The chances of Quanta delivering an earnings beat in the second quarter are high, as it has an Earnings ESP of +10.42% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Quanta’s second-quarter earnings is pegged at 48 cents per share, implying 54.8% growth on a year-over-year basis. The consensus estimate for revenues is $2.54 billion, indicating a 10.7% year-over-year decline (read more: Is Quanta Poised to Beat Earnings Estimates in Q2?).
KBR, Inc. KBR is slated to report second-quarter 2020 results before the opening bell. In the last reported quarter, the company’s top and bottom lines surpassed the Zacks Consensus Estimate by 5.4% and 6.4%, respectively. In fact, KBR surpassed the Zacks Consensus Estimate in all the trailing four quarters, delivering an average earnings surprise of 3.1%, as shown in the chart below:
KBR, Inc. Price and EPS Surprise
KBR, Inc. price-eps-surprise | KBR, Inc. Quote
Similar to Quanta, the chances of KBR delivering an earnings beat in the second quarter are high, as it has an Earnings ESP of +11.11% and a Zacks Rank #3.
The Zacks Consensus Estimate for its second-quarter earnings is pegged at 36 cents per share, implying a 12.2% decline on a year-over-year basis. The consensus estimate for revenues is $1.36 billion, indicating a 4.5% year-over-year decline.
AAON, Inc. AAON is slated to report second-quarter 2020 results after the closing bell. In the last reported quarter, the company’s earnings beat the consensus mark by 17.1%. AAON’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters but missed the same on the other two occasions, with the average surprise being 3.2%, as shown in the chart below:
AAON, Inc. Price and EPS Surprise
AAON, Inc. price-eps-surprise | AAON, Inc. Quote
The chances of AAON delivering an earnings beat are low this time around as it has a Zacks Rank #3 and an Earnings ESP of 0.00%.
The Zacks Consensus Estimate for AAON’s second-quarter earnings is pegged at 38 cents per share, implying growth of 52% on a year-over-year basis.
Advanced Drainage Systems, Inc. WMS is slated to report first-quarter fiscal 2021 results before the opening bell. In the last reported quarter, the company’s earnings and revenues missed the Zacks Consensus Estimate by 75% and 0.1%, respectively. In fact, Advanced Drainage lagged the Zacks Consensus Estimate in all the trailing four quarters, with an average negative earnings surprise of 53.6%, as shown in the chart below:
Advanced Drainage Systems, Inc. Price and EPS Surprise
Advanced Drainage Systems, Inc. price-eps-surprise | Advanced Drainage Systems, Inc. Quote
The chances of Advanced Drainage delivering an earnings beat are low this time around as it has a Zacks Rank #3 and an Earnings ESP of 0.00%.
The Zacks Consensus Estimate for the company’s fiscal first-quarter earnings is pegged at 65 cents per share, implying growth of 103.1% on a year-over-year basis. The consensus estimate for revenues is $510 million, indicating 23.4% year-over-year growth.
Howmet Aerospace Inc. HWM is slated to report second-quarter 2020 results before the opening bell. In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 1.6% but revenues missed the same by 0.3%. In fact, Howmet topped the Zacks Consensus Estimate in three of the trailing four quarters, delivering an average earnings surprise of 19.7%, as shown in the chart below:
Howmet Aerospace Inc. Price and EPS Surprise
Howmet Aerospace Inc. price-eps-surprise | Howmet Aerospace Inc. Quote
Its chances of delivering an earnings beat are low this time around as it has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.
The Zacks Consensus Estimate for the company’s second-quarter earnings is pegged at 4 cents per share, implying a 93.1% decline on a year-over-year basis. The consensus estimate for revenues is $1.10 billion, indicating a 70.3% year-over-year decrease.
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Quanta Services, Inc. (PWR) : Free Stock Analysis Report
Vulcan Materials Company (VMC) : Free Stock Analysis Report
KBR, Inc. (KBR) : Free Stock Analysis Report
Advanced Drainage Systems, Inc. (WMS) : Free Stock Analysis Report
AAON, Inc. (AAON) : Free Stock Analysis Report
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Jacobs Engineering Group Inc. (J) : Free Stock Analysis Report
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