TNB Thomas & Betts Corp.

We are reaffirming our Outperform recommendation on Valmont Industries (VMI). The company’s fourth-quarter 2011 earnings of $1.83 per share outpaced the Zacks Consensus Estimate of $1.66. Revenues cruised 25.7% year over year to $752.7 million led by significant growth in the Irrigation segment.

The Nebraska-based company saw growth across the board in the fourth quarter. Revenues from its Irrigation and Utility Support Structures segments shot up 34% and 63% year over year, respectively.

Valmont makes fabricated metal products, metal and concrete pole and tower structures and mechanized irrigation systems in the U.S. and abroad.  It competes with Lindsay Corporation (LNN) and Thomas and Betts Corp. (TNB) among others.

Valmont is witnessing significant strength in the irrigation market and an improving demand for utility transmission structure. The outlook for irrigation equipment is healthy while demand for Utility Support Structures is expected to rise moving ahead. Recent order activity and a growing backlog support expectations for a strong 2012.

We are encouraged to see a pick-up across Valmont’s Irrigation and Coatings segments recently. In the Irrigation unit, improving North American equipment demand is boosting net farm income.

We also believe acquisitions will spur growth moving forward. Valmont, in May 2010, bought UK-based industrial engineer Delta plc. Delta’s engineered support structures business and galvanizing facilities added size and geographic coverage to Valmont’s current businesses.

Going forward, management sees continued strong performance in 2012. Besides a healthy outlook for the Irrigation and Utility Support Structures division, a continued good performance in the Coatings segment is expected in 2012.

While Valmont envisions increased sales and profitability in the Engineered Infrastructure Products segment in 2012, the division is still operating in an environment of fiscal austerity and measured government funding for infrastructure projects.

Our recommendation on the stock is in agreement with a short-term Zacks #1 Rank (Strong Buy).

 
LINDSAY CORP (LNN): Free Stock Analysis Report
 
THOMAS & BETTS (TNB): Free Stock Analysis Report
 
VALMONT INDS (VMI): Free Stock Analysis Report
 
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