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Why Is Martin Marietta (MLM) Down 3.6% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Martin Marietta Materials, Inc. (MLM - Free Report) . Shares have lost about 3.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Martin Marietta Misses Q4 Earnings, Beats Revenues
Martin Marietta fourth-quarter 2016 adjusted earnings per share of $1.55 missed the Zacks Consensus Estimate of $1.66 by 6.6%. However, earnings rose 23% from the prior-year quarter.
Despite improving economic conditions, cost management and enhanced operational efficiency, the company has been facing constrained construction activity in its markets. Specifically, Martin Marietta continues to face delays in Texas Department of Transportation projects, decline in railroad ballast shipments, abnormally wet weather conditions and a slower energy-related marketplace and the impact of hurricane Matthew.
Net sales of $889 million surpassed the Zacks Consensus Estimate of $887.61 million by 0.2% but increased 13.9% year over year.
Total revenue (including freight and delivery) was $948.8 million, up 12.3% from the year-ago quarter. Freight and delivery revenues were $59.8 million, down 6.3% year over year.
Segment Discussion
The Aggregates segment produces, processes and sells aggregates like crushed stone, sand and gravel. The segment also includes Martin Marietta’s vertically-integrated operations, i.e., asphalt products, ready mixed concrete and road paving construction services.
Aggregates business’ net sales (including vertically-integrated operations) grew 16.1% to $777.4 million on the back of strong volume and margins.
Shipments (volume) in the aggregates product line increased 0.4%. Geographically, Mid-America Group reported the highest increase in aggregate volume of 4.9% during the quarter, whereas the Southeast and West groups reported a decline in volume by 2.5% and 3.6%, respectively.
Aggregates business' gross margin (excluding freight and delivery revenues) of 22.6% increased 160 basis points (bps).
The Cement segment was formed after the TXI acquisition in Jul 2014. Martin Marietta divested its California cement business, which had been acquired from TXI in 2015. The segment recorded net sales of $85.4 million in the quarter, reflecting a 2.2% increase.
Shipments were impacted by delays in the department of transportation projects and slower activity in the south Texas markets.
Revenues at the Magnesia Specialties segment, which includes magnesium oxide, magnesium hydroxide and dolomite lime products, increased 16.5% year over year to $59.4 million.
Margins Rise
Total adjusted gross margin (excluding freight and delivery revenues) increased 160 bps to 25.3%.
2016 Results
Martin Marietta’s adjusted earnings of $6.63 per share in 2016 increased 54.5%. The company’s net sales of $3.57 billion grew 9.4% year over year.
Financials
Martin Marietta ended the quarter with cash and cash equivalents of $50 million, as of Dec 31, 2016, compared with $168.4 million as of Dec 31, 2015.
In the fourth quarter, the company repurchased 344,300 shares, returning $69.2 million to shareholders.
2017 Guidance
The company is encouraged by the positive trends in the markets it serves and its ability to execute strategic business plans.
Net sales are expected in the band of $3.75 billion to $3.95 billion.
Aggregates business’ net sales (excluding downstream business) are expected in the range of $1.32–$1.40 billion. Aggregates product line volume is expected to increase in the range of 4–5.5%. Non-residential market is expected to increase in a low to mid-single digit range. The residential market is expected to grow in the mid to high-single digit range. Meanwhile, the ChemRock/Rail market volumes are likely to remain stable.
Sales at the Magnesia Specialties Products segment are projected between $235 million and $240 million. Cement sales are expected in the band of $380 million to $400 million. SG&A expenses are estimated in the range of $255 million to $265 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Martin Marietta Materials, Inc. Price and Consensus
At this time, Martin Marietta's stock has a great Growth Score of 'A', though it is lagging a bit on the momentum front with a 'C'. Following a similar course, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable more for growth than momentum based on our styles scores.
Outlook
The stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.
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Why Is Martin Marietta (MLM) Down 3.6% Since the Last Earnings Report?
A month has gone by since the last earnings report for Martin Marietta Materials, Inc. (MLM - Free Report) . Shares have lost about 3.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Martin Marietta Misses Q4 Earnings, Beats Revenues
Martin Marietta fourth-quarter 2016 adjusted earnings per share of $1.55 missed the Zacks Consensus Estimate of $1.66 by 6.6%. However, earnings rose 23% from the prior-year quarter.
Despite improving economic conditions, cost management and enhanced operational efficiency, the company has been facing constrained construction activity in its markets. Specifically, Martin Marietta continues to face delays in Texas Department of Transportation projects, decline in railroad ballast shipments, abnormally wet weather conditions and a slower energy-related marketplace and the impact of hurricane Matthew.
Net sales of $889 million surpassed the Zacks Consensus Estimate of $887.61 million by 0.2% but increased 13.9% year over year.
Total revenue (including freight and delivery) was $948.8 million, up 12.3% from the year-ago quarter. Freight and delivery revenues were $59.8 million, down 6.3% year over year.
Segment Discussion
The Aggregates segment produces, processes and sells aggregates like crushed stone, sand and gravel. The segment also includes Martin Marietta’s vertically-integrated operations, i.e., asphalt products, ready mixed concrete and road paving construction services.
Aggregates business’ net sales (including vertically-integrated operations) grew 16.1% to $777.4 million on the back of strong volume and margins.
Shipments (volume) in the aggregates product line increased 0.4%. Geographically, Mid-America Group reported the highest increase in aggregate volume of 4.9% during the quarter, whereas the Southeast and West groups reported a decline in volume by 2.5% and 3.6%, respectively.
Aggregates business' gross margin (excluding freight and delivery revenues) of 22.6% increased 160 basis points (bps).
The Cement segment was formed after the TXI acquisition in Jul 2014. Martin Marietta divested its California cement business, which had been acquired from TXI in 2015. The segment recorded net sales of $85.4 million in the quarter, reflecting a 2.2% increase.
Shipments were impacted by delays in the department of transportation projects and slower activity in the south Texas markets.
Revenues at the Magnesia Specialties segment, which includes magnesium oxide, magnesium hydroxide and dolomite lime products, increased 16.5% year over year to $59.4 million.
Margins Rise
Total adjusted gross margin (excluding freight and delivery revenues) increased 160 bps to 25.3%.
2016 Results
Martin Marietta’s adjusted earnings of $6.63 per share in 2016 increased 54.5%. The company’s net sales of $3.57 billion grew 9.4% year over year.
Financials
Martin Marietta ended the quarter with cash and cash equivalents of $50 million, as of Dec 31, 2016, compared with $168.4 million as of Dec 31, 2015.
In the fourth quarter, the company repurchased 344,300 shares, returning $69.2 million to shareholders.
2017 Guidance
The company is encouraged by the positive trends in the markets it serves and its ability to execute strategic business plans.
Net sales are expected in the band of $3.75 billion to $3.95 billion.
Aggregates business’ net sales (excluding downstream business) are expected in the range of $1.32–$1.40 billion. Aggregates product line volume is expected to increase in the range of 4–5.5%.
Non-residential market is expected to increase in a low to mid-single digit range. The residential market is expected to grow in the mid to high-single digit range. Meanwhile, the ChemRock/Rail market volumes are likely to remain stable.
Sales at the Magnesia Specialties Products segment are projected between $235 million and $240 million. Cement sales are expected in the band of $380 million to $400 million. SG&A expenses are estimated in the range of $255 million to $265 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Martin Marietta Materials, Inc. Price and Consensus
Martin Marietta Materials, Inc. Price and Consensus | Martin Marietta Materials, Inc. Quote
VGM Scores
At this time, Martin Marietta's stock has a great Growth Score of 'A', though it is lagging a bit on the momentum front with a 'C'. Following a similar course, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable more for growth than momentum based on our styles scores.
Outlook
The stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.