What happened

Shares of Arcosa (ACA 1.27%) surged by 12.2% through 1:46 p.m. ET Friday after the Dallas-based construction products company reported a sizable first-quarter earnings beat.

Heading into earnings, analysts had forecast Arcosa would earn $0.55 per share on sales of just over $500 million. In fact, the company reported an adjusted (i.e., non-GAAP) profit of $1.06 per share on sales of more than $549 million.  

So what

Revenues grew only 3% in the quarter, but that apparent weakness was mainly because the company sold off its storage tanks business last quarter, meaning those revenues went away. Backing out the data from the divested business, sales would have been up 15% year over year.  

Adjusted profits grew 152% year over year and earnings as calculated according to generally accepted accounting principles (GAAP) did even better -- up 178% to $1.14 per share.

Management sounded optimistic on multiple fronts, noting "healthy organic revenue growth" in its construction products business, which produces, among other things, aggregates used in road building and other construction. Arcosa also received $800 million worth of new orders for wind towers in its engineered structures business. And in its transportation products segment, Arcosa booked 80% more orders for barges in the quarter than it billed as revenue for barges produced. This points to strong revenue growth ahead for the barges business.

Now what

Taking all this into consideration, management raised its guidance for this year's revenue modestly, to a range of $2.2 billion to $2.3 billion. That doesn't imply much revenue growth over 2022, granted -- less than 1% in fact, at the midpoint of the range. But remember, this year's revenues will look relatively depressed because of the storage tanks business divestiture.

As regards earnings, Arcosa declined to give guidance on GAAP profits, stating only that it thinks adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) will land in the $345 million to $370 million range. That entire range is well above the previous guidance range.

Arcosa trades at a valuation of about 11.6 times earnings and pays a modest dividend that at the current share price yields 0.3%. And with analysts forecasting a 16% long-term annualized earnings growth rate -- and with the company coming off an exceptionally strong first quarter -- it could be an overlooked gem -- a bona fide value stock available at a very reasonable price.