Valmont’s Strategic Positioning and Growth Potential Justify Buy Rating

Tomohiko Sano, an analyst from J.P. Morgan, has initiated a new Buy rating on Valmont (VMI).

Tomohiko Sano has given his Buy rating due to a combination of factors that highlight Valmont’s strategic positioning and growth potential. The company stands to benefit significantly from its involvement in key structural megatrends like electrification, grid hardening, and renewable energy integration, which are expected to drive mid-single-digit organic growth. Additionally, Valmont’s substantial backlog of $1.5 billion is anticipated to support an additional $500-700 million in revenue over the next few years, fostering sustainable double-digit earnings per share growth.
Moreover, Valmont’s focus on infrastructure, which constitutes about 70% of its revenue, positions it well for continued demand in utility, telecom, and renewable sectors. The company’s investments in growth capital expenditures and its strategic exit from less profitable segments are expected to enhance EBITDA margins. Valmont’s valuation is supported by its high return on invested capital and disciplined capital management, with a projected return of approximately $600 million to shareholders over the next three years. These factors collectively underpin the confidence in Valmont’s long-cycle value creation and justify the Buy rating.

Based on the recent corporate insider activity of 75 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of VMI in relation to earlier this year.