Back to top

Bear of the Day

Weak results have led to sharp downward estimates revisions, sending this construction materials company to a Zacks Rank # 5 (Strong Sell).

About the Company

Headquartered in Raleigh, North Carolina, Martin Marietta Materials (MLM - Snapshot Report) is the country’s second largest producer of construction aggregates, used primarily for construction of roads, highways and other infrastructure projects and in the domestic commercial and residential construction industries.

The company operates through approximately 300 quarries, distribution yards and plants located in 28 states, Canada, the Bahamas and the Caribbean Islands.

Disappointing Results

MLM reported its second quarter FY 2013 results on July 30, 2013. Diluted EPS for the quarter came in at $0.88 per share, down substantially from the Zacks Consensus Estimate of $1.11 per share. The company said that the results were affected by excessive rainfall in most of their key markets-- particularly in the midwestern and southeastern states.

According to company estimates that the precipitation reduced shipment volumes between 1.5 million and 1.7 million tons, lowering net earnings by up to $0.11 per diluted share in addition to significantly affecting the operational productivity.

For the full-year, the company anticipates aggregates product line shipments to increase by 1% to 3%.

Downwards Revisions

Due to disappointing results and uninspiring guidance, quarterly and annual estimates have been revised sharply downwards in the past few weeks. Zacks consensus estimates for the current quarter and year are now $1.47 and $2.55 per share respectively, down substantially from $1.60 and $2.92 per share, 30 days ago.

The company has missed estimates in three of the past four quarters, with an average negative surprise of 23.9%.

The Bottom Line

MLM is currently Zacks Rank # 5 (Strong Sell) stock and it has a longer-term recommendation of “Underperform”.  Further, uninspiring guidance from the management regarding the volumes has resulted in weak outlook for the stock for the time being.

Better Play?

Investors seeking exposure to Construction industry could look at some of the homebuilders instead of construction materials suppliers. Among the Homebuilders—Meritage Homes (MTH) beat the Zacks Consensus Estimate for both revenues and earnings. This Zacks Rank# 2 (Buy) stock saw increasing demand and pricing in most housing markets during the recent quarter.

However, we may add that rising mortgage rates seem to have started impacting the housing market and as a result, estimates for homebuilders may come down slightly if the trend continues.

Want the latest recommendations from Zacks Investment Research? Today, you can download7 Best Stocks for the Next 30 Days.Click to get this free report >>

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%