Valmont Industries, Inc. (VMI) is proving that strong performance does not always require a sales surge. Even with a dip in sales in its fiscal third quarter, the company delivered impressive results. Operating profit surged, and operating margins expanded year-over-year. This highlights the power of strategic execution, even during challenging times.

The company’s commitment to pricing discipline and cost structure improvements has really paid off. Notably, VMI generated $225 million in operating cash flow, strengthening its already robust balance sheet and giving the company the financial flexibility to navigate future challenges.

The company is also benefiting from a rise in utility capital expenditures. As the demand for power continues to grow, fueled by electrification, industrial expansion, and the rise of data centers, utility companies are ramping up investments in infrastructure. This trend is expected to last for years, presenting VMI with ample opportunities to expand its footprint.

Moreover, VMI is well-positioned to take advantage of the long-term effects of the Bipartisan Infrastructure Deal. The deal authorized $110 billion in new funding for repairing roads, bridges, and rails across the United States, with surface transportation programs reauthorized for five years.

The massive investment still holds the potential to drive significant demand for infrastructure products, benefiting VMI for years to come.

The proof of VMI’s success is evident in its stock performance. The stock has surged 33.4% in the past six months and 54.8% over the past year to close the last trading session at $338.45. That said, the company has demonstrated its ability to capitalize on the infrastructure boom and maintain a strong market position.

So, let us dive into the factors that could shape VMI’s performance in the near future.

Sound Historical Growth

Over the past five years, VMI has demonstrated consistent growth across key financial metrics. Its revenue grew at a CAGR of 7.8%, while EBITDA rose faster at 13.7%. Operational income (EBIT) and total assets expanded at CAGRs of 16.5% and 5.1%, respectively.

Notably, net income surged at a CAGR of 18.4%, and EPS climbed even higher at 19.5%, showcasing robust profitability. The sustained performance underscores VMI’s strong growth trajectory and its ability to deliver solid results over time.

Strong Financials

For the fiscal 2024 third quarter that ended September 28, VMI’s net sales came in at $1.02 billion. Its adjusted gross profit was reported to be $301.69 million. The company’s adjusted operating income increased 4.1% year-over year to$125.74 million.

Additionally, net earnings attributable to VMI and EPS were reported to be $83.07 million and $4.11, compared to a net loss and loss per share of $49.03 million and $2.34 in the prior year’s quarter, respectively. As of September 28, 2024, VMI’s total assets amounted to $3.50 billion, compared to $3.48 billion on December 30, 2023.

Favorable Analyst Estimates

Analysts predict VMI’s revenue for the fiscal fourth quarter ending December 2024 to come in at $1.01 billion. Moreover, its EPS for the ongoing quarter is expected to increase 14.3% year-over-year to $3.63. The company has exceeded the consensus EPS estimates in each of the four trailing quarters, which is noteworthy.

For the full fiscal year 2024, ending December 2024, VMI’s revenue is forecasted to reach $4.05 billion, while its EPS for the same period is expected to rise 13.3% from the previous year, reaching $16.98.

Plus, looking ahead to fiscal 2025, analysts anticipate further growth, with revenue and EPS forecasted to rise by 2.7% and 5.6% from the prior year, reaching $4.16 billion and $17.93, respectively.

High Profitability

VMI’s trailing-12-month EBITDA margin of 14.78% is 6.2% higher than the industry average of 13.92%. Its trailing-12-month levered FCF margin stands at 9.82%, 45.8% higher than the industry average of 6.74%.

Additionally, VMI’s trailing-12-month asset turnover ratio of 1.16x outperforms the industry average of 0.78x by 48.1%. Moreover, the company boasts a trailing-12-month net income margin of 7.56%, which is 15.6% above the sector average of 6.54%.

POWR Ratings Reflects Optimism

VMI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

VMI has a B grade for Quality supported by profitability metrics that outperform the industry average. Plus, its B grade for Sentiment is in line with optimistic analyst estimates.

Additionally, VMI has a B grade for Growth, as shown by its impressive growth metrics over the past few years.

VMI has topped the 30-stock Industrial - Metals industry. Beyond what is stated above, we have also given VMI's grades for Value, Momentum, and Stability. Get all VMI ratings here.

Bottom Line

VMI has solidified its position as a market leader in the infrastructure sector, thanks to its strategic market positioning and a diverse, high-performing portfolio. With strong profitability, solid financials, and favorable analyst projections, VMI is well-placed to continue driving growth and delivering returns for investors in 2025.

How Does Valmont Industries, Inc. (VMI) Stack Up Against Its Peers?

Although VMI’s near-term outlook appears sound, it may be worthwhile to explore its industry peers, who currently exhibit even stronger POWR Ratings. So, consider these A (Strong Buy) stocks from the Industrial - Metals industry:

BHP Group Limited (BHP)

Rio Tinto Group (RIO)

Gibraltar Industries, Inc. (ROCK)

To explore more A or B-rated Industrial - Metals stocks, click here.

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VMI shares were unchanged in premarket trading Monday. Year-to-date, VMI has gained 45.96%, versus a 29.08% rise in the benchmark S&P 500 index during the same period.

Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.

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