Valmont Industries, Inc. VMI has been benefiting from its multiyear utility investment cycle, expanding production capacity, disciplined pricing and ongoing productivity initiatives.
The company’s shares have gained 27.5% over a year compared with the Zacks Steel - Pipe and Tube industry’s 42.9% rise.
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Let’s find out why VMI stock is worth retaining at the moment.
Utility Investment and Capacity Expansion Aid Growth
Valmont is well positioned to benefit from the multiyear investment cycle underway in the utility industry. Increasing power demand, grid modernization, electrification and the rapid expansion of data centers require investments in transmission, distribution and substation infrastructure. This is creating sustained demand for the company across the power grid. Management raised its 2026 Infrastructure sales guidance to $3.4-$3.5 billion and expects healthy volume growth.
Valmont is also expanding its capacity and improving manufacturing throughput to support this demand. The company invested $55 million in North America Infrastructure capital expenditures during the first half of 2026. Importantly, its 2025-2029 framework estimates roughly $1 billion of incremental sales and $10 of adjusted EPS from utility partnerships and capacity and throughput expansion.
Pricing actions are further supporting Infrastructure profitability. North America Utility pricing and volume leverage helped increase Infrastructure operating margin to 17.6% in the second quarter of 2026 from 16.3% on an adjusted basis a year earlier. North America Coatings sales also increased 16.6%, supported by infrastructure and data-center demand. Management expects pricing actions and operational execution to keep Infrastructure margins around first-half 2026 levels through year-end despite elevated material and freight costs.
Productivity Gains & Technology Investments Strengthen Earnings
Valmont’s ongoing productivity and realignment initiatives are providing another important source of earnings growth. The company continues to streamline its cost structure through commercial, engineering and operational initiatives. Unallocated corporate expenses declined to $49 million in the first half of 2026 from $57.8 million a year earlier, when realignment charges were included. Management is targeting a 17% operating margin by 2029, indicating further opportunities for margin expansion.
The company’s Agriculture business is also being strengthened through technology and aftermarket offerings. While weak farm economics have weighed on new equipment demand, aftermarket parts sales increased about 6%, and technology services rose 7% in the second quarter. Management expects these initiatives to support margin expansion when agriculture markets recover.
Valmont’s stronger operating performance has already led management to raise its 2026 outlook. The company now expects net sales of $4.3-$4.45 billion, compared with the previous range of $4.2-$4.4 billion. The lower end of adjusted EPS guidance was lifted to $22.25 from $21.50.
Agriculture and Telecommunications Softness Ails
Farm economics are limiting equipment spending in North America, while tighter credit continues to constrain Brazil. Second-quarter Agriculture sales fell 15.8%, with North America down 2.3% and international sales down 28.9% as Middle East conflict delayed projects. Management kept 2026 Agriculture sales guidance at $0.9-$0.95 billion, implying a 6-11% decline, and expects normal seasonality to reduce second-half margins. These conditions could keep the segment below its earnings potential until equipment demand recovers.
North America Telecommunications sales also declined 26.1% in the second quarter as carriers shifted capital allocation, and management expects the business to be down in the teens for the year.
Valmont Industries, Inc. Price, Consensus and EPS Surprise
Valmont Industries, Inc. price-consensus-eps-surprise-chart | Valmont Industries, Inc. Quote
VMI’s Zacks Rank & Key Picks
VMI currently carries a Zacks Rank #3 (Hold)
Some better-ranked stocks in the Basic Materials space are Neo Performance Materials Inc. NOPMF, Carpenter Technology Corporation CRS and Avient Corporation AVNT.
While NOPMF currently sports a Zacks Rank #1 (Strong Buy), CRS and AVNT carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NOPMF’s 2026 earnings is pinned at $1.4 per share, indicating a 185.71% year-over-year increase. NOPMF’sshares have gained 91.6% over the past year.
The Zacks Consensus Estimate for CRS’ fiscal 2027 earnings is pegged at $12.92 per share, indicating a rise of 20.07% year over year. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 8.39%.
The Zacks Consensus Estimate for AVNT’s current-year earnings is pinned at $3.2 per share, indicating a 13.48% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 3.4%. AVNT’sshares have gained 20.3% over the past year.
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Valmont Industries, Inc. (VMI): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).