Published on 1 May 2024 on Zacks via Yahoo Finance
Watch These 5 Construction Stocks for Q1 Earnings: Beat or Miss?
The Zacks Construction sector has been seeing a positive earnings picture this time around. The sector has witnessed improved demand trends across the markets despite adverse weather conditions in early 2024.Per the latest Earnings Trends report, the first-quarter earnings season has seen releases from approximately 53.8% of the total construction companies on the S&P 500 Index, capturing a total market cap of 57.6%. Of them, total earnings are up 15.1% from the year-ago period on 7.9% higher revenues, with 85.7% beating earnings per share (EPS) estimates and 42.9% beating revenue estimates.The construction sector earnings are expected to rise 10.3% for the first quarter. This indicates growth from the fourth-quarter 2023 improvement rate of just 2.6%. Revenues are projected to increase 6.8%, suggesting an acceleration from 5.1% growth registered in the prior quarter.
Factors Shaping the Trend
The distinct trends across residential and non-residential markets are likely to shape the Zacks Construction sector's performance in the first quarter of 2024. Spending on new single-family construction projects have been balancing out the shortage of non-residential infrastructure projects in recent months.The U.S. housing industry is still bearing the pressure of extremely high mortgage rates, which is haunting potential buyers to invest. So far in 2024, mortgage rates have relentlessly held between 6.6% and 7%. This apart, weather-related impacts and elevated labor costs might have hampered overall performance. To a relief, desire to own a new home amid limited availability of existing homes, encouraging repair and remodeling activities, and homebuilders' cost management efforts are likely to have contributed to growth.The non-residential industry players might have benefited from strong global trends in infrastructure modernization, energy transition and national security. In fact, rising investments in telecommunications networks, especially in 5G technologies, environmental remediation and climate resilience, have had further support performance.Utilizing the Zacks Stock Screener, we've singled out five stocks within the construction sector. These include Quanta Services, Inc. PWR, Vulcan Materials Company VMC, MasTec, Inc. MTZ, Howmet Aerospace Inc. HWM, and Frontdoor, Inc. FTDR, all scheduled for release on May 2.