From Nasdaq, Inc.:

The construction sector is expected to benefit from infrastructure projects and energy transition initiatives in the fourth quarter of 2023, but challenges like a slowdown in residential activities and elevated costs may hinder overall performance. The overall estimate picture is mixed with construction sector earnings expected to inch up 0.4% for the fourth quarter. Three construction stocks, JELD-WEN Holding, Inc. (JELD), Floor & Decor Holdings, Inc. (FND), and Vulcan Materials Company (VMC), are poised to beat the Zacks Consensus Estimate this earnings season. JELD-WEN is likely to beat expectations when it reports fourth-quarter 2023 results. Floor & Decor is likely to beat expectations when it reports fourth-quarter fiscal 2023 results. While Vulcan Materials Company is likely to beat expectations when it reports fourth-quarter 2023 results. The Construction sector’s performance in the fourth quarter of 2023 showcases distinct trends across residential and non-residential segments. Overall, prudent cost-saving measures, disciplined project management, and robust funding programs underpin the sector’s performance.

The fourth-quarter earnings season for the construction sector has seen releases from approximately 70.7% of the construction sector’s market capitalization on the S&P 500 Index. Total earnings are down 2.5% from the year-ago period on 1.8% higher revenues, with 87.5% beating earnings per share (EPS) estimates and 62.5% beating revenue estimates. Residential-focused companies face challenges due to higher borrowing costs and escalating costs of materials and labor, resulting in lower earnings. However, they may see growth due to the enduring aspiration for home ownership, limited availability of existing homes, and modest repair and remodeling activities. Non-residential industry players stand to benefit from heightened demand for infrastructure solutions such as energy transition and technological advancements. They are susceptible to weather-related risks, but a mild winter is expected to contribute to growth.

The Zacks methodology helps identify stocks that boast solid fundamentals and are poised to beat estimates this earnings season. Three construction stocks may stand out this earnings season. JELD-WEN topped earnings estimates in all the trailing four quarters, with an average of 126.5%. Floor & Decor topped earnings estimates in two of the trailing four quarters and missed in one and met on another occasion, with an average of 4.9%. Vulcan topped earnings estimates in three of the trailing four quarters and missed on one occasion, with an average of 13.6%.

These stocks are poised to beat estimates when they report their earnings for the fourth quarter, with JELD-WEN reporting on February 19, Floor & Décor reporting on February 22, and Vulcan reporting on February 16. The Zacks Consensus Estimate for JELD’s fourth-quarter EPS is pegged at 25 cents, representing a decline of 46.8% from the year-ago reported figure. The estimate for FND’s fiscal fourth-quarter EPS is pegged at 27 cents, representing a decline of 57.8% from the year-ago reported figure. The estimate for VMC’s fourth-quarter EPS is pegged at $1.36, representing a growth of 25.9% from the year-ago reported figure.



Read more: 3 Construction Stocks Poised to Beat Q4 Earnings Estimates