4 Construction Stocks Poised For A Q3 Earnings Beat

Again, the U.S. construction market in 2017 is expected to get an additional boost if, as announced, the Trump administration invests heavily in infrastructure improvements. Particularly, his plans of boosting infrastructure by rebuilding highways and other significant infrastructure like bridges, tunnels, airports, schools, and hospitals have put the spotlight squarely on stocks related to the sector.

Q3 Expectations

Half of the Zacks broad sectors (8 out of 16) are expected to be in the negative territory in the third quarter of 2017. But where does the construction sector stand in this prevailing earnings season?  As far as estimates go, the overall picture isn’t at all that dreary. Per the Zacks latest Earnings Trends, the construction sector’s earnings are expected to increase 8.1% in Q3 as compared with 15.5% in the preceding quarter. Revenues are also expected to improve 10.5% (8.8% growth in Q2). For 2017, earnings are most likely to rise 14.2% (against 7.6% seen in 2016) on 9.1% revenue growth (6.9% a year ago), while margins are expected to improve to 0.31% from 0.04% a year ago.

In spite of the inventory woes and higher land/labor costs, it is a profitable strategy to zero in on a handful of construction stocks that are poised to beat earnings this quarter. An earnings beat would also pave the way for stock price appreciation.

Which Are the Right Picks?

Picking the right stock for your portfolio could appear to be a daunting task given the wide range of companies in the construction space. An easy way is to look at stocks that have a solid Zacks Rank accompanied by a favorable Earnings ESP.  The combination of a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) with a positive Earnings ESP usually hints at an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP is our proprietary methodology for determining which stocks have the best chance to pull a surprise in their next earnings announcement. It shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate.

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

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