$128.95
$320.82
bear $128.95
base $228.49
bull $320.82
margin of safety $115.00
market price* $444.53
Valmont Industries (Omaha, Nebraska) makes engineered steel and aluminum structures and irrigation equipment. In fiscal 2025 its Infrastructure segment sold $3.10 billion: transmission and distribution poles and structures for electric utilities ($1.51 billion, up 10.4% on pricing and volume), lighting and traffic poles ($830 million), galvanizing and coatings ($362 million), wireless communication structures ($314 million) and solar trackers and frames ($82 million, down 46% after the company exited select regional solar markets). The Agriculture segment sold $1.02 billion, mainly Valley center-pivot irrigation systems, split roughly evenly between North America and international markets. About 70% of sales are in the United States, 7% in Australia and 4% in Brazil. Order backlog was $1.65 billion at the end of 2025, up from $1.44 billion a year earlier, driven by Infrastructure; most of it ships in 2026. How we measure earnings. We start from cash generated by operations, strip out swings in working capital, deduct stock-based pay as a real cost, and deduct the capital spending needed to keep the existing business running (spending tied to revenue growth is treated as investment). On that basis owner earnings per share were: 2016 $7.87, 2017 $6.80, 2018 $6.35, 2019 $5.38, 2020 $4.63, 2021 $9.79, 2022 $13.30, 2023 $11.88, 2024 $16.54, 2025 $18.58. Judgements that matter: write-downs of acquired businesses (about $141 million in 2023, mostly the Prospera irrigation-technology acquisition, and $91 million in 2025, mostly solar and access-systems assets) are non-cash and are added back, but the company's record of buying businesses and later writing them off is charged in the bear case. The $265 million inventory build of 2021, when steel prices spiked, is a working-capital swing and is excluded. Capital spending jumped to $145 million in 2025, largely utility capacity, but because revenue was flat almost all of it is treated as maintenance, which understates 2025 earnings. Figures for 2016 and 2017 predate a restatement that modestly changed reported 2018 earnings; the effect on the series is small. The earnings level. Because lenders are valued separately, we work with cash flow before interest: owner earnings plus about $39 to $58 million a year of cash interest. The anchor is the median of 2021 to 2025, $15.46 per share. The company has been a materially larger business since 2021 (revenue $3.5 to $4.3 billion versus $2.5 to $2.9 billion before, after the ConvertBuild and Prospera acquisitions and the growth of the utility business), so earlier years describe a smaller company. The window still contains a weak stretch: North American irrigation sales fell 11.3% in 2025 on low grain prices, and Brazil brought $23.8 million of customer credit losses and a $24.2 million legal accrual after an unfavorable appellate ruling. The anchor sits well below the 2024 and 2025 results ($19.39 and $20.53 per share). Cash flow before interest per share grew 5.9% in 2025; the base case assumes no growth from the anchor in year one. Debt. Valmont owes $450 million of 5.00% notes due October 2044 and $305 million of 5.25% notes due October 2054; its $800 million revolving credit line runs to July 2030 and was essentially undrawn at June 2026. Because these coupons are fixed for 18 and 28 more years, the notes are counted at about $676 million rather than their $755 million face value. Adding the Brazil legal accrual ($24 million) and minority partners' redeemable stake ($9 million) and subtracting $139 million of cash gives about $570 million, or $29 per share. There is no maturity before 2044 and interest is about $2 per share against cash flow of $15 or more, so refinancing is not a live risk in any case. Base case ($228 per share). Cash flow before interest holds at $15.46 per share indefinitely. What keeps it going is structural and long-evidenced: replacement and extension of utility poles, street lighting and irrigation systems across a very large installed base that Valmont has served since the 1950s. No growth is credited. Utility demand from grid reinforcement and data centers is real, but beyond the signed backlog it is market growth rather than secured volume, so it is left out. The business is worth about $258 per share ($5.0 billion), it owes $29 per share, and the shares are worth about $228. Bear case ($129 per share). We model a downturn on the 2014-2016 pattern, when the farm cycle turned and steel and commodity markets fell: Valmont's operating income dropped from $358 million in 2014 to $132 million in 2015 (about $174 million before impairments), roughly half. Here cash flow before interest falls about 40% to $9.30 per share in years three and four, recovers to $13 by year six, and carries a further $1 per share a year of capital lost on acquisitions through year ten, in line with the roughly $296 million written off between 2018 and 2025. After year ten it holds at $12 per share through year thirty, and nothing is counted beyond that. The business is worth about $158 per share ($3.1 billion), it owes $29, and the shares are worth about $129. Even at the trough, cash flow covers interest about four times. Bull case ($321 per share). The utility business keeps its demonstrated pricing and volume, the backlog that rose 15% in 2025 ships, and cash flow before interest steps up to $21 per share in 2026, a little above the 2025 level, and holds there. No further growth is credited, because utility capital spending growth and new data-center demand are not contracted. The business is worth about $350 per share ($6.8 billion), it owes $29, and the shares are worth about $321. Testing the case. The main risk to the base case is that the 2022-2025 earnings level was flattered by a temporary utility boom. The first half of 2026 does not show that yet: sales rose 6.3% to $2.15 billion, and cash from operations rose to $252 million from $233 million. The case would be wrong if utilities cut transmission spending sharply, if steel price deflation were passed through to customers faster than costs fall, or if management keeps paying for acquisitions that are later written down, as happened with Prospera and the solar businesses. Margin-of-safety price ($115). How sure are we of the level? Moderately. Cash flow per share has roughly doubled since 2020, and part of that is a strong utility cycle; our anchor already sits about a quarter below 2025. What is the worst plausible outcome? A simultaneous farm-cycle trough and utility spending pause like 2015, plus more write-offs. The structure would survive it: debt is long-dated with no maturities for 18 years, no customer is material, and the assets are factories and galvanizing plants with long working lives. If we are wrong about the level and the business slips back toward its 2016-2020 earning power, the shares are worth roughly the bear case, about $129. Over the holding period, the dividend pays about $2.70 a share a year. From $115, if the base case is recognized within four years, the base-case value of about $228 plus about $11 of dividends implies roughly double the starting price, about 20% a year. If the bear case plays out instead, $115 is still below what the shares are worth on that path, so the bear case implies a modest gain. Above $115 the return the base case implies over a four-year holding period falls below 20%; below it, the cushion against the bear case grows. Our previous figures for Valmont were prepared on a different basis and are not comparable.