2012 still looks hot for growth in global infrastructure. Valmont Industries, Inc. (VMI) recently reported a record 2011 as irrigation, utilities and coatings remained strong. This Zacks #1 Rank (Strong Buy) is also a value stock with a forward P/E of 14.7.
Valmont manufactures a variety of infrastructure products including poles, towers and structures for lighting and traffic, wireless communication and utility customers.
The company makes a variety of tubing for commercial and industrial applications. It also produces mechanized irrigation equipment for the agriculture industry.
The company has four segments: Utility Support Structures; Irrigation; Engineered Infrastructure Products; and Protective Coatings.
Valmont Beat by 10.2% in the Fourth Quarter
On Feb 14, Valmont reported its fourth quarter and full year 2011 results and surprised on the Zacks Consensus Estimate for the fifth consecutive quarter. Earnings were $1.83 compared to the consensus of $1.66. The company made just $1.32 in the year ago quarter.
Sales soared 25.7% to a fourth quarter record of $752.7 million from $598.7 million in the fourth quarter of 2010.
The quarter was boosted by strong demand in the Utility, Irrigation and Coatings segments.
Irrigation was hot because farmers saw record income in 2011. In Utility, sales were up due to needed capacity additions to the North American transmission grid. In Coatings, it was simply both increased internal and customer demand.
Not to be left out, Engineered Infrastructure also was higher due to improved demand in the Asia-Pacific region.
In Utility, sales rose 63%. The company expects the new demand to be part of a multi-year investment in the North American electrical grid. International utility sales fell slightly.
In Irrigation, which was 24% of sales in the quarter, sales rose 34% to $180.6 million as commodity prices remained high.
On the Coatings side, which was just 12% of sales, sales jumped 11% to $88.9 million. Coatings are used to protect against corrosion of steel and aluminum. Internal demand increased due to higher irrigation and utility volumes.
Bullish on 2012
The company anticipates the momentum from 2011 to continue in 2012.
Irrigation equipment is expected to remain strong. The Utility segment is also projected to see increased demand.
Sales are expected to rise about 10% with earnings per share in the range of $7.30 to $7.60.
2012 Zacks Consensus Estimate Jumps
After the record fourth quarter results, analysts turned even more bullish about 2012. 7 estimates moved higher in the last 30 days pushing up the Zacks Consensus Estimate to $7.53 from $6.98.
That’s further earnings growth of 26.4%.
Back to the 2008 High?
Shares have been on a tear in 2012 and are fast approaching the pre-recession highs in 2008.
Despite the highs, there is still value in the shares.
In addition to a P/E under 15, the company also has a price-to-book of 2.5. A P/B under 3.0 usually indicates there is value.
Valmont also has other solid fundamentals, including a 1-year return on equity (ROE) of 14.4%.
If the rally in the shares wasn’t enough for investors, they are also rewarded with a small dividend currently yielding 0.7%.
Valmont was in the right industries in 2011. Analysts expect more of the same in 2012. With both earnings growth and value, Valmont is an attractive way to play both the global infrastructure build-out and agriculture.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at @TraceyRyniec.
