Vulcan Materials Earnings: An Early Look

Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors, and Vulcan Materials (VMC 0.83%) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed, knee-jerk reaction to news that turns out to be exactly the wrong move.

The housing market has bounced back strongly, and many companies, including Vulcan Materials, are starting to see the positive effects of greater housing construction activity. Let's take an early look at what's been happening with Vulcan Materials over the past quarter and what we're likely to see in its quarterly report on Thursday.

Stats on Vulcan Materials

Source: Yahoo! Finance.

Will Vulcan Materials build higher this quarter?
Analysts have gotten a bit more optimistic about Vulcan over the course of the past few months, raising their earnings-per-share estimates by a penny and boosting 2013 full-year EPS by $0.03. But the stock has gotten a much bigger boost, rising almost 20% just since mid-November.

During the housing bust, Vulcan and its construction-aggregate peers felt the pinch. But as housing has recovered, new-home starts and permits have risen, and that points to future growth leading to improved demand for aggregates and associated materials.

In addition, recovery efforts from Hurricane Sandy have created new construction demand. Cemex (NYSE: CX) reported an 11% rise in revenue during the fourth quarter, as the cement-maker benefited from improving conditions throughout the construction industry. Similarly, wallboard maker USG (USG) saw a 12% increase in sales, with wallboard prices rising more than 17% due to extremely high demand.

One interesting deal to look for further clarification on is Plum Creek Timber's (PCL.DL) purchase of a royalty stream from Vulcan for $75 million. The deal helps Plum Creek diversify its timber exposure and gets Vulcan some valuable cash, but with Plum Creek getting a 10.5% royalty on the sale of about 144 million tons of crushed stone over the next 25 years, the move will affect Vulcan's cash flow well into the future.

In Vulcan's report, watch for how the company expects to respond to these improving conditions in the industry. With Martin Marietta Materials (MLM 0.89%) maintaining a big edge in profitability over Vulcan, investors need to know how Vulcan can stand up to its competitors and outperform them in the future.

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