Why Valmont Industries (VMI) Stock Is Lower Today

NEW YORK (TheStreet) -- Shares of Valmont Industries Inc. (VMI) are down by 1.77% to $134.97 in mid-morning trading on Friday, after the company cut its full year 2014 guidance, and said it's now expecting earnings between $8.70 and $8.90 per share, compared to its previous forecast in the range of $9.35 to $9.65 per share.

The producer of fabricated metal products said it's expecting fully diluted earnings per share, including the effects of its share repurchases to date, to be between approximately $9 and $9.20 per share.

Analysts polled by Thomson Reuters are expecting the company to post EPS of $9.45 for the 2014 fiscal year.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Valmont said it lowered its fiscal outlook as over $40 million projects in its utility structures segment, which were scheduled for delivery to customers in the second half of 2014, were delayed until fiscal 2015.

"Pricing in certain sectors of the market continues to be challenging. In the Irrigation Segment, based on the recent farm commodity price trends and harvest expectations in North America, the Company expects segment operating earnings in the second half of 2014 to be approximately 10% below the same period of 2013," the company said.

"The Australian industrial economy continues to experience softness, which affect our Coatings and Engineered Infrastructure Products segments," Valmont added.

Separately, TheStreet Ratings team rates VALMONT INDUSTRIES INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate VALMONT INDUSTRIES INC (VMI) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, VMI has a quick ratio of 2.36, which demonstrates the ability of the company to cover short-term liquidity needs.
  • VMI, with its decline in revenue, slightly underperformed the industry average of 4.0%. Since the same quarter one year prior, revenues slightly dropped by 4.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • VALMONT INDUSTRIES INC's earnings per share declined by 28.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, VALMONT INDUSTRIES INC increased its bottom line by earning $10.36 versus $8.75 in the prior year. For the next year, the market is expecting a contraction of 8.8% in earnings ($9.45 versus $10.36).
  • In its most recent trading session, VMI has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
  • You can view the full analysis from the report here: VMI Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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