Today’s news: Boise Cascade (BCC) moves from Buy to Hold; earnings reports from Cavium (CAVM), Martin Marietta Materials (MLM), Quanta Services (PWR) and Vulcan Materials (VMC).
Boise Cascade (BCC) moves from Buy to Hold today as it breaks past price resistance at 36. I expect the stock to rise to the low 40s, where it last traded in early 2015. Hold.
Cavium (CAVM) reported third-quarter results yesterday afternoon. Revenue, EPS and non-GAAP gross margins all came in higher than Wall Street consensus estimates. Non-GAAP EPS were $0.76 vs. the consensus $0.74. Cavium projects fourth-quarter revenue and EPS to come in slightly above current analysts’ estimates. Gross margins are expected to continue rising in 2018 due to an improving product mix.
The stock has been weak today, within its normal trading range. CAVM is an undervalued, mid-cap aggressive growth stock in the semiconductor industry. Buy CAVM now. Strong Buy.
Martin Marietta Materials (MLM – yield 0.8%) reported third-quarter 2017 results this morning. Revenue was $1.088 billion vs. the consensus estimate of $1.07 billion. Earnings per diluted share of $2.39 reached record levels, but missed the consensus estimate of $2.45. Pricing improved along all product lines. The quarter was impacted by several hurricanes and ongoing labor shortages across the U.S. that are slowing the pace of customers’ projects. Martin Marietta Materials is a supplier of crushed stone, sand, gravel, cement, concrete and asphalt.
The company projects full-year 2017 revenue to be approximately $3.92 billion vs. the consensus $3.82 billion, and full-year 2018 revenue to be approximately $3.69 billion vs. the consensus $3.8 billion. Martin Marietta’s purchase of Bluegrass Materials is expected to be finalized in the first half of 2018. The company is expected to achieve over 30% EPS growth in 2018.
The stock is volatile today, briefly rising above its recent trading range between 210 and 219, then falling to 210. Buy.
Quanta Services (PWR) reported third-quarter non-GAAP EPS of $0.63 this morning when the market was expecting $0.61. CEO Duke Austin said, “We achieved record quarterly revenues, record backlog and solid adjusted earnings per share growth as compared to the third quarter of last year. More importantly, we believe there is opportunity to achieve higher levels of record backlog and are confident that Quanta is well positioned for revenues and earnings growth in 2018.”
Quanta Services provides specialized infrastructure and network services to the electric power, oil and natural gas industries. The company projects full-year 2017 revenue within a range of $9.25 billion to $9.35 billion, when analysts were expecting $8.9 billion, and non-GAAP EPS within a range of $1.90-$2.00, when analysts expected $2.02.
PWR is an undervalued, aggressive growth stock. Today’s price volatility could lead to a short-term pullback, which I would not consider worrisome. Strong Buy.
Vulcan Materials (VMC – yield 0.8%) reported third-quarter adjusted EPS of $1.04 yesterday afternoon. The Zacks estimate was $0.95 and the Thomson Reuters estimate was $1.05. (It’s odd that these two sources of consensus estimates differed so greatly.)
CEO Tom Hill commented in reference to third-quarter business disruptions associated with hurricanes, “Underlying demand, however, remains solid, the pricing environment remains positive and our unit profitability in aggregates continues to strengthen. [O]ur cash gross profit per ton set a third-quarter record despite the severe weather.”
Vulcan Materials is a supplier of construction aggregates, asphalt and concrete. The company will finalize its purchase of Aggregates USA in the fourth quarter of 2017. The stock is undervalued based on aggressive 2018 EPS growth expectations. VMC reacted well to the earnings report, and is rising toward its June peak at 134. Buy.