Valmont Industries Earnings Preview

Valmont Industries VMI is on tap to share its second-quarter 2011 results Friday, July 15, before the markets open. Investors in this leading producer of engineered products will be watching to see whether rising steel costs and pricing pressures or strong demand for irrigation equipment and additional benefit from the recent acquisition of Delta will win the day. Analysts are looking for Valmont to report per-share earnings of $1.45, which is up from the estimate of $1.42 just 60 days ago, as well as $1.10 per share earnings in the same period of last year. The consensus forecast also calls for revenues of $613.1 million, an increase of 27.3% from a year ago. Note that Valmont topped consensus earnings estimates in three of the past four quarters; the beat was by two cents per share in the first quarter. And analysts so far are looking for year-over-year growth of both earnings and revenue for the current quarter. The Company Valmont Industries is based in Omaha and produces and sells fabricated metal products, structures and mechanized irrigation systems globally. The company has four business units: Engineered Infrastructure Products, Irrigation, Utilities Support Structures and Coatings. It serves state and federal governments, contractors, utility and telecommunications companies, commercial lighting fixtures manufacturers, large farms and the greater manufacturing sector. During the three months that ended in June, Valmont raised its dividend 9% and announced a public offering, and its Coatings division received five excellence awards. Performance The long-term earnings per share growth forecast is 10.5% and the dividend yield is 0.6%. The P/E ratio is less than the industry average. The consensus recommendation of analysts is to buy the stock; 4 of 7 analysts following Valmont rate the stock a Strong Buy. Their mean price target is $117.50 per share, well above $102.86 at yesterday's close. The share price pulled back in June along with the broader markets, but bounced back and now is about 16% higher than at the beginning of the year. During that time, VMI has outperformed its industry average and the broader markets. Action Items: Bullish: Traders interested in exchange traded funds invested in Valmont might want to consider the following trades:

• PowerShares Water Resources PHO: +4.8% year to date
• iShares S&P MidCap 400 Index IJH: +8.2% year to date
• SPDR S&P MidCap 400 MDY: +11.1% year to date
• PowerShares Global Water PIO: +4.6% year to date

Bearish: Traders looking for a little more performance may want to check out Valmont's top competitors; the stocks of both have outperformed Valmont over the past year:

• Lindsay LNN: +112.1% in the past year
• Thomas and Betts TNB: +45.6% in the past year

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