Vulcan Materials Beats Expectations with Strong Q2 Earnings, Analyst Raises Price Target

Truist Securities's Keith Hughes raised their price target on Vulcan Materials Co (NYSE: VMC) by 15.6% from $225 to $260 on 2023/08/05. The analyst maintained their Strong Buy rating on the stock.

Vulcan Materials, a leading producer of construction aggregates in the United States, recently reported positive quarterly results, beating expectations and showing strong performance in key financial metrics. Hughes, after reviewing the company's Q2 2023 earnings report released on August 3, expressed confidence in Vulcan's future prospects.

According to Hughes, Vulcan Materials' management's guidance increase "looks somewhat conservative," suggesting that the company could potentially outperform its projections. This positive sentiment is reflected in the analyst's decision to raise the price target on VMC shares.

For the second quarter of 2023, Vulcan Materials reported earnings per share (EPS) of $2.29, surpassing both the Zacks Consensus Estimate of $1.91 and the previous year's Q2 earnings of $1.53 by an impressive 49.7%. The company's revenue for the quarter stood at $2.11 billion, exceeding the Zacks Consensus Estimate by 2.47% and showing an 8.2% increase compared to the same period in 2022. Additionally, Vulcan Materials' EBITDA for Q2 2023 reached $595 million, marking a substantial 32.3% year-over-year growth.

Looking ahead, Vulcan Materials' management provided guidance for FY 2023, forecasting a net income attributable to the company of $855 million to $935 million. They also projected an EBITDA range of $1.9 billion to $2 billion. However, one notable aspect of the guidance is the expectation of a 1% to 4% decline in aggregates shipments compared to the previous fiscal year.

During the earnings call, Chairman and CEO Tom Hill emphasized the company's commitment to improving unit profitability and growing earnings to create value for shareholders. Hill stated, “We’re well positioned to do exactly that this year and deliver approximately 20% year-over-year improvement in both our cash gross profit per ton and adjusted EBITDA.”

In addition to Keith Hughes, other analysts also updated their ratings and price targets for Vulcan Materials on August 4, 2023. Citigroup's James Hardiman raised their price target by 1.6% to $256 and maintained their Strong Buy rating on the stock. Stephens & Co.'s Trey Grooms increased their price target by 13% to $230 while also maintaining a Strong Buy rating. RBC Capital's Mike Dahl raised their price target by 11.3% to $212 and maintained a Buy rating on the stock.

The majority of top-rated analysts currently view Vulcan Materials as a Strong Buy or Buy, with 88.9% holding this optimistic outlook. Only 11.1% consider the stock a Hold, while no analysts recommend or strongly recommend selling the stock.

Looking at the consensus forecast among analysts, the expectation is that Vulcan Materials will deliver earnings per share (EPS) of $6.81 for the upcoming year. If these predictions hold true, it would represent a 24.6% year-over-year increase in EPS.

Since the release of Vulcan Materials' latest quarterly report on August 3, 2023, the stock price has experienced a marginal decline of 0.1%. However, when considering the performance over the past year, VMC shares have seen a significant increase of 32.6%, outpacing the broader S&P 500, which has risen by 7.9% during the same period.

Keith Hughes, the Truist Securities analyst who raised the price target on Vulcan Materials, is ranked in the top 2% of Wall Street analysts by WallStreetZen. Hughes specializes in the Basic Materials and Industrials sectors, among others, and has an impressive average return of 32.3% with a win rate of 64.5%.

Vulcan Materials Company, founded in 1909 and headquartered in Birmingham, Alabama, is a prominent producer of construction aggregates. The company's offerings include crushed stones, sand, gravel, asphalt mix, asphalt construction paving, and ready-mixed concrete. Vulcan Materials also mines, produces, and sells calcium products for various industries such as animal feed, plastics, and water treatment.

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