Keep an Eye on This Infrastructure Stock

VMI could be a big benefactor to President Biden's lofty infrastructure goals

Apr 19, 2021 at 10:08 AM
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Valmont Industries, Inc. (NYSE:VMI) is an American engineering company that designs and manufacture products to support infrastructure development and agricultural productivity. Valmont is scheduled to release first-quarter earnings on Wednesday, April 21, after the close. For all quarterly reports released on fiscal 2020, Valmont has managed to outperform expectations four out of four times. However, a closer look at the numbers is warranted.

In the last eight quarters, VMI has averaged a post-earnings move of 5.7%, regardless of direction. This includes post-earnings pops of 10.3% in April of 2020, as well as a 12.7% drop in February 2020. For Thursday, the options market is pricing in a slightly larger-than-usual post-earnings move of 7.6%. 

On the charts, Valmont Industries stock is up 117% in the last 12 months. While carving out this channel of higher highs, VMI scored a record high of $251.63 on March 16. And while the shares have pulled back since then, their ascending 60-day moving average has stepped up as support. The company also offers a $2.00 forward dividend, which is equivalent to a dividend yield of 0.84%.

VMI Stock Chart

Despite Valmont stock currently trading at a fairly high price-earnings ratio of 36.18, VMI still has room to continue running in the short-term and the long-term. One of the primary reasons being that its forward price-earnings ratio of 18.21 is significantly lower than where it currently trades. Another important reason is the pending infrastructure talks being pushed by President Biden.

Valmont Industries is also coming off one of its best years in terms of revenue growth. VMI managed to increase revenues by 4.6% in fiscal 2020, which is a huge improvement compared to the relaxed - but steady - growth it had demonstrated in recent years. It is, however, important to note the Valmont Industries has lacked consistent growth on the bottom-line, with net income declining 8.5% most recently in 2020.

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