Valmont Reaches a New 52-Week High - Analyst Blog

Shares of Valmont Industries VMI reached a new 52-week high of $159 on May 14, before closing the day at $157.67 with a 4.8% gain.

The company's long-term estimated earnings per share EPS growth rate is 11.7%. Average volume of shares traded over the last three months was around 260.3K.

Growth Drivers

Valmont's earnings in the first quarter of 2014 came in at $2.20 per share (barring charges related to the fair value adjustment of Delta EMD shares on the Johannesburg Stock Exchange), surpassing the Zacks Consensus Estimate of $2.15 per share.

Valmont's board of directors recently came up with a capital allocation plan. The board authorized Valmont to repurchase up to $500 million of its outstanding shares, from time to time over the next 12 months at prevailing market prices, through open market or privately negotiated transactions.

The board also approved a 50% hike in Valmont's quarterly cash dividend to 37.5 cents per share payable on Jul 15, 2014, to shareholders of record as of Jun 27, 2014.

Moreover, the directors approved capital expenditures of about $340 million for the period of 2014 to 2016. They stated that investment in working capital is necessary for future sales growth.

Valmont aims at maintaining Moody's Corp. MCO Baa2 and Standard and Poor's BBB debt rating, with lower debt ratings of Baa3 and BBB being reserved for special opportunities.

Valmont is one of the prominent steel-pipe and tube companies along with MRC Global Inc. MRC and Mueller Water Products, Inc. MWA. Its growth is being supported by acquisitions.

Valmont, in Mar 2014, acquired privately held, leading Northern European engineered steel products maker – DS-SM A/S (rechristened Valmont SM A/S). The acquisition has enabled Valmont to cater to a wide range of industries. The DS-SM acquisition contributed $17.3 million to the first quarter sales. The acquisition is expected to be accretive to Valmont's 2014 earnings.