5 Construction Stocks Poised to Beat This Earnings Season

Per the latest Earnings Trends report, the second-quarter earnings season has so far seen releases from approximately 17.6% of the companies on the S&P 500 Index. Of these, the Construction sector's total earnings declined 20.4% year over year, while revenues fell 3.9%. Despite the weaker overall performance, 100% of the companies beat earnings per share (EPS) estimates and 66.7% exceeded revenue expectations.

Infrastructure Spending Likely Remained the Sector's Biggest Tailwind

Infrastructure-oriented contractors are expected to have delivered another healthy quarter, supported by continued execution of federally funded highway, bridge, water and aviation projects. Demand also remained robust from utility, energy and grid modernization investments. Engineering and heavy civil companies likely benefited from a large backlog, providing strong revenue visibility despite macroeconomic uncertainty.

Private investment in AI infrastructure remained another major growth catalyst. Construction activity tied to hyperscale data centers, power infrastructure and advanced manufacturing facilities likely supported companies with exposure to mission-critical projects. Although semiconductor and certain reshoring-related projects moderated compared with their earlier peak, AI-related spending continued to offset part of that weakness.

Residential Construction Likely Remained Uneven

Residential construction probably remained the weakest area of the sector during the quarter. High mortgage rates, elevated home prices and affordability constraints likely weighed on buyer demand, forcing homebuilders to continue offering incentives to stimulate sales. While demographic demand remained supportive over the long term, near-term operating conditions were challenging. Single-family housing starts and building permits weakened further during the quarter, suggesting softer construction activity. Builders also continued balancing production with inventory levels rather than pursuing aggressive expansion, which likely restrained revenue growth across many residential-focused companies.

Non-Residential Markets Presented a Mixed Picture

Commercial construction trends likely varied considerably by end market. Data centers, healthcare facilities, public buildings and education projects probably remained relatively resilient, supported by strong project pipelines and long-duration contracts. Conversely, office construction continued to face structural weakness, while several manufacturing and warehouse projects progressed more cautiously amid higher financing costs and evolving capital-spending priorities. Industrial construction also reflected mixed trends, as reshoring investments remained selective and some factory projects were delayed because of rising costs. Warehouse construction showed signs of recovery after an extended slowdown, though developers remained disciplined.

Margins Likely Reflected Both Pricing Strength and Cost Pressures

Profitability across the sector is expected to have remained uneven. Contractors with specialized capabilities, disciplined bidding strategies and favorable contract structures likely preserved margins through pricing actions and efficient project execution. Companies benefiting from higher-margin data center and infrastructure work may have reported continued margin resilience. However, rising labor expenses, tariffs on construction materials, supply-chain disruptions and equipment procurement costs likely continued to pressure project economics. Homebuilders probably experienced additional margin compression from elevated incentives and higher input costs, while commercial contractors with fixed-price contracts may also have encountered cost inflation challenges.

Q2 Expectations

Per the latest Earnings Trends report, construction sector earnings are expected to decline 3.4% for the second quarter from a year ago. This indicates a narrower decrease from the first quarter of 2026’s 4.7% decline. Revenues, however, are projected to grow 4.8%, suggesting a decline from 5.8% growth registered in the preceding quarter.

Second-quarter 2026 earnings are expected to underscore a construction industry increasingly divided between resilient infrastructure and technology-driven projects on one hand, and a still-challenging residential and traditional commercial environment on the other. Companies with diversified end-market exposure, strong execution capabilities and sizable backlogs are likely to remain the sector's best performers in the current environment.

The Zacks Methodology

Picking the right stock could be difficult unless one knows the proper method. To make the task simple, we rely on the Zacks methodology, combining a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) and a positive Earnings ESP.

Our proprietary methodology, Earnings ESP, shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Research shows that for stocks with this combination of the Zacks Rank and ESP, chances of a positive earnings surprise are as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Winning Stocks

For investors willing to adopt this strategy, we have highlighted five construction stocks that may stand out this earnings season.

CRH — a global provider of building materials and solutions serving infrastructure, non-residential, and residential construction — topped earnings estimates in two of the trailing four quarters, met in one and missed on another occasion, with the average surprise being 0.7%.

CRH is likely to beat expectations when it reports second-quarter 2026 results on July 30, 2026, before the opening bell. This Zacks Rank #3 company has an Earnings ESP of +4.08%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CRH’s second-quarter EPS is pegged at $1.96, representing 1% growth from the year-ago reported figure.

KBR — a global engineering, construction and services firm serving the global energy and international government services markets — topped earnings estimates in all the trailing four quarters, with the average surprise being 4.8%.

KBR is likely to beat expectations when it reports second-quarter 2025 results on July 30, before the opening bell. This Zacks Rank #3 company has an Earnings ESP of +8.70%.

The Zacks Consensus Estimate for KBR’s second-quarter EPS is pegged at 92 cents, representing growth of 1.1% from the year-ago reported figure on a 3.5% revenue decline.

Owens Corning — A branded building products leader with market-leading roofing, insulation and door businesses serving residential markets across North America and Europe — topped earnings estimates in three of the trailing four quarters, with the average being 3.8%.

Owens Corning is likely to beat expectations when it reports second-quarter 2026 results on Aug. 5, 2026, before market open. This Zacks Rank #3 company has an Earnings ESP of +1.66%.

The Zacks Consensus Estimate for Owens Corning’s second-quarter EPS is pegged at $3.06, representing a decline of 27.3% from a year ago.

Owens Corning Inc Price and EPS Surprise

SPX Technologies — supplies engineered HVAC, detection and measurement solutions across North America and international markets — topped earnings estimates in all the trailing four quarters, with the average surprise being 9.7%.

SPX Technologies is likely to beat expectations when it reports second-quarter 2026 results on July 30, 2026, before market open. This Zacks Rank #2 company has an Earnings ESP of +1.35%.

The Zacks Consensus Estimate for SPX Technologies’ second-quarter EPS is pegged at $1.85, representing growth of 12.1% from a year ago on 15.1% higher revenues.

Amentum — provides engineering and technology solutions in the United States and internationally — topped earnings estimates in all the trailing four quarters, with the average surprise being 4%.

Amentum is likely to beat expectations when it reports third-quarter fiscal 2026 results on Aug. 11, 2026, before market open. This Zacks Rank #2 company has an Earnings ESP of +3.18%.

The Zacks Consensus Estimate for Amentum’s fiscal third-quarter EPS is pegged at 63 cents, representing growth of 12.5% from a year ago on 1% higher revenues.

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This article originally published on Zacks Investment Research (zacks.com).

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