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Martin Marietta Materials (MLM - Free Report) is a Zacks Rank #1 (Strong Buy) that produces and supplies construction aggregates and other heavy building materials, mainly cement, in the United States.
The stock is trading just below all-time highs as investors see strong demand helping earnings for the next few years. While it is hard to chase a stock like this higher, investors should be watching for opportunistic pullbacks.
About the Company
Martin Marietta was founded in 1939 and is headquartered in Raleigh, NC. The company offers crushed stone, sand, and gravel products; ready mixed concrete and asphalt; paving products and services; and Portland and specialty cement for use in infrastructure projects, and nonresidential and residential construction markets, as well as in the railroad, agricultural, utility, and environmental industries.
The stock has a Zacks Style Score of “D” in Value and Momentum. It has a Forward PE of 28 and pays a small dividend of about half a percent. MLM currently employs 9,400 and has a market cap of $27 billion.
Q1 Earnings Beat
In early May, the company reported a 118% EPS beat. Q1 earnings came in at $2.16 v the $0.99 expected and revenues were $1.35B v the $1.19B expected. Management cited solid near-term product demand as a reason for the big quarter.
The company adjusted its FY23 outlook, seeing EBITDA at the higher end of the expected range. They also lifted their revenue outlook to $6.6-6.82B v the $6.27 expected.
Management saw healthy customer backlogs across their footprint which was led by infrastructure and heavy nonresidential project of scale. They expect recent legislation and public investment to support demand for several years.
The CEO commented, “We are confident in our ability to continue to expand margins throughout the year and expect to deliver compelling full-year financial results more directionally in line with the high end of our previously announced 2023 guidance range, which we will revisit at mid-year.”
The earnings beat was the second quarter in a row after the company reported multiple misses over the last couple years.
Analyst Estimates
Looking at analyst estimates since earnings, we see longer-term numbers shooting higher, while short-term looks mixed.
Looking at the current quarter, have estimates moving 1% higher over the last 90 days. However, for the next quarter, they are going down by almost 2%. While the magnitude of these moves is low, it tells us that analysts might be conservative in their expectations.
This idea is backed up when you look at the bigger picture and see longer-term estimates are going higher over the last 90 days.
For the current year, analysts have taken numbers from $14.84 to $15.89, or 7%. For next year, we see estimates jump from $17.04 to $18.14, or 6.5%.
The Technicals
The stock is trading near 52-week highs, which happen to be all-time highs. Understanding that many investors do not like to chase, let us go over possible areas of support.
The stock topped at $462 in late June before pulling back to the $440 area where the 21-day MA has shown some support. Below that level, $417 looks to be the 50-day MA support area, and then $380 is the earnings gap fill.
If we get a market sell-off, investors can hope for the 200-day MA at $364, but this is unlikely unless aggressive market selling comes in.
For those that look for Fibonacci retracements, the $405 level is the halfway back spot, found drawing from the pre-earnings breakout area to recent highs. The 61.8% retracement is $390.
Bottom Line
While Martine Marietta has had quite the run, there are both technical and fundamental reasons for this.
When a stock trades at all-time highs, there is price discovery above, which is what MLM is going through now.
On the fundamental side, strong demand led by public investment will be a tailwind for revenues for years. This will keep investors interested and willing buyers to come in on any sell-off.
Those interested in the name should watch support levels for buying opportunities and look for MLM to finish off the year strong.
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Bull of the Day: Martin Marietta Materials (MLM)
Martin Marietta Materials (MLM - Free Report) is a Zacks Rank #1 (Strong Buy) that produces and supplies construction aggregates and other heavy building materials, mainly cement, in the United States.
The stock is trading just below all-time highs as investors see strong demand helping earnings for the next few years. While it is hard to chase a stock like this higher, investors should be watching for opportunistic pullbacks.
About the Company
Martin Marietta was founded in 1939 and is headquartered in Raleigh, NC. The company offers crushed stone, sand, and gravel products; ready mixed concrete and asphalt; paving products and services; and Portland and specialty cement for use in infrastructure projects, and nonresidential and residential construction markets, as well as in the railroad, agricultural, utility, and environmental industries.
The stock has a Zacks Style Score of “D” in Value and Momentum. It has a Forward PE of 28 and pays a small dividend of about half a percent. MLM currently employs 9,400 and has a market cap of $27 billion.
Q1 Earnings Beat
In early May, the company reported a 118% EPS beat. Q1 earnings came in at $2.16 v the $0.99 expected and revenues were $1.35B v the $1.19B expected. Management cited solid near-term product demand as a reason for the big quarter.
The company adjusted its FY23 outlook, seeing EBITDA at the higher end of the expected range. They also lifted their revenue outlook to $6.6-6.82B v the $6.27 expected.
Management saw healthy customer backlogs across their footprint which was led by infrastructure and heavy nonresidential project of scale. They expect recent legislation and public investment to support demand for several years.
The CEO commented, “We are confident in our ability to continue to expand margins throughout the year and expect to deliver compelling full-year financial results more directionally in line with the high end of our previously announced 2023 guidance range, which we will revisit at mid-year.”
The earnings beat was the second quarter in a row after the company reported multiple misses over the last couple years.
Analyst Estimates
Looking at analyst estimates since earnings, we see longer-term numbers shooting higher, while short-term looks mixed.
Looking at the current quarter, have estimates moving 1% higher over the last 90 days. However, for the next quarter, they are going down by almost 2%. While the magnitude of these moves is low, it tells us that analysts might be conservative in their expectations.
This idea is backed up when you look at the bigger picture and see longer-term estimates are going higher over the last 90 days.
For the current year, analysts have taken numbers from $14.84 to $15.89, or 7%. For next year, we see estimates jump from $17.04 to $18.14, or 6.5%.
The Technicals
The stock is trading near 52-week highs, which happen to be all-time highs. Understanding that many investors do not like to chase, let us go over possible areas of support.
The stock topped at $462 in late June before pulling back to the $440 area where the 21-day MA has shown some support. Below that level, $417 looks to be the 50-day MA support area, and then $380 is the earnings gap fill.
If we get a market sell-off, investors can hope for the 200-day MA at $364, but this is unlikely unless aggressive market selling comes in.
For those that look for Fibonacci retracements, the $405 level is the halfway back spot, found drawing from the pre-earnings breakout area to recent highs. The 61.8% retracement is $390.
Bottom Line
While Martine Marietta has had quite the run, there are both technical and fundamental reasons for this.
When a stock trades at all-time highs, there is price discovery above, which is what MLM is going through now.
On the fundamental side, strong demand led by public investment will be a tailwind for revenues for years. This will keep investors interested and willing buyers to come in on any sell-off.
Those interested in the name should watch support levels for buying opportunities and look for MLM to finish off the year strong.