We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Martin Marietta (MLM) Hits 52-Week High, Aids SOAR 2025 Goals
Read MoreHide Full Article
Martin Marietta Materials, Inc. (MLM - Free Report) has been banking on increased investments in large infrastructure and manufacturing projects. On Dec 15, this producer and supplier of construction aggregates touched a new 52-week high of $499.31.
However, the stock pulled back to end the trading session at $489.94, down 0.63% from the previous day’s closing price of $493.05.
The company has been benefiting from solid pricing across businesses amid low volume. Also, the business-mix portfolio, its discreetly curated coast-to-coast footprint and its prime focus on value-over-volume commercial strategy are commendable.
Impressive Stock Performance
Martin Marietta’s shares have risen 15.9% in the past three months compared with the Zacks Building Products - Concrete and Aggregates industry’s 11.7% growth and the S&P 500 Index’s 5.3% rise. Investors’ sentiments might have been boosted by the solid inflow of public funds for infrastructure and manufacturing activities.
Image Source: Zacks Investment Research
The bottom-line estimate for 2023 moved up to $18.44 per share from $18.33 in the past seven days, indicating 52.8% year-over-year growth. The positive trend signifies bullish analyst sentiments, indicating robust fundamentals and an outperformance in the near term.
Let’s delve deeper into the factors supporting this Zacks Rank #2 (Buy) company.
Strong Q3 Results & Upbeat 2023 Views: MLM posted solid results for third-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimate by 17% and increased 48% on a year-over-year basis. Revenues also rose 10.1% from the prior-year period's level. Martin Marietta expects a significant boost in aggregate demand in the U.S. economy in the remainder of 2023.
Given the improving trends, the company is optimistic that the demand in its end-markets is likely to accelerate upon the moderation of inflation and stable monetary policy. Owing to the tailwinds, it also raised its full-year expectations for adjusted EBITDA and net earnings from continuing operations.
Martin Marietta now expects consolidated products and services revenues to be in the range of $6,735-$6,855 million compared with $6,725-$6,860 million predicted earlier. The company anticipates adjusted EBITDA to be between $2,050 million and $2,150 million, up from the previously projected range of $2,000-$2,100 million.
Total aggregate pricing per ton is anticipated to grow 18-20%, up from the previously anticipated range of 17-19%. Gross profit is expected to be between $1,350 million and $1,410 million, up from $1,330-$1,395 million expected earlier.
Long-Term Plans: Martin Marietta has been gaining strength from long-term strategic plans — Strategic Operating Analysis and Review (“SOAR”) 2025 initiatives. It is to be noted that 2022 marked the 11th year of consecutive growth in consolidated product and service revenues, adjusted gross profit and adjusted EBITDA.
Martin Marietta has been focusing on SOAR plans that include portfolio optimization, assessing business combinations and arrangements with other companies engaged in similar businesses, increasing footprint in core businesses, investing in internal expansion projects in high-growth markets and pursuing new opportunities associated with the existing markets served.
Higher Infrastructural Spending: The U.S. government’s focus on spurring massive infrastructure investments in roads, highways, ports and airports bodes well for aggregate producers like Martin Marietta.
The plan also addresses the issues related to drinking water and wastewater systems, energy and rural infrastructure and veterans’ hospitals, to name a few. This will further propel demand for products sold by companies like MLM. In the near term, it expects affordability-driven headwinds in the single-family residential end market. This will be offset by a significant acceleration in public infrastructure investment and continued strength in large-scale energy, domestic manufacturing and multi-family residential projects.
As of Sep 30, 2023, highway, bridge and tunnel contract awards increased 18.2% to a record of $114 billion compared with $97 billion as of September 2022 end. In the third quarter of 2023, the infrastructure market accounted for 39% of aggregate shipments.
The firm expects infrastructure shipments to grow meaningfully in the future, driven by healthy state Department of Transportation budgets and an anticipated extension or replacement for the Fixing America’s Surface Transportation Act.
Select In-organic Moves: The company has been reviewing its overall portfolio for opportunities to maximize value by monetizing or exchanging select assets. After terminating the agreement with CalPortland for the sale of the Tehachapi California cement plant on May 3, 2023, Martin Marietta finally divested this business to UNACEM Corp. SAA. on Oct 31, 2023. Also, it divested its California-based Stockton cement import terminal on May 3.
In November, it entered into a definitive agreement to divest its South Texas cement business and certain of its related concrete operations to CRH plc’s (CRH - Free Report) subsidiary, CRH Americas Materials, Inc.
After the $2.1 billion worth of divestiture, the assets of the acquirer will include the Hunter cement plant in New Braunfels, a chain of terminals along the eastern Gulf coast of Texas and 20 concrete plants serving the Austin and San Antonio region. The integrated portfolio of these assets is expected to generate pro-forma 2023 EBITDA of nearly $170 million. This transaction is subject to regulatory approval and is expected to close in the first half of 2024.
About CRH
CRH is a provider of building materials solutions with operating locations in 29 countries. It operates in two divisions that are CRH Americas and CRH Europe. In 2022, the Americas division contributed 63% of its global sales and the Europe division contributed 37% of the same. In the third quarter of 2023, both its operating divisions contributed strongly, thus resulting in sales growth year over year.
The firm currently carries a Zacks Rank #2. The Zacks Consensus Estimate for CRH’s 2023 sales and earnings per share indicates growth of 12.4% and 31%, respectively, from the previous year’s reported levels.
Frontdoor: Based in Memphis, TN, the company provides home service plans in the United States. The firm is benefiting from impressive customer retention rates. Thanks to the robust awareness of the Frontdoor brand, it has been shifting its attention toward capitalizing on customer demand. This strategic move allows FTDR to redirect its marketing investments toward expanding its Direct-to-Consumer channel under the American Home Shield brand.
Looking ahead, the company is committed to establishing a solid foundation by investing in its brand, technology infrastructure and enhancing productivity throughout the organization.
Frontdoor has seen an upward earnings estimate revision to $2.03 and $2.34 per share for 2023 and 2024, respectively, over the past 60 days from $1.65 and $1.89. The estimated figure indicates 59.8% and 15.1% year-over-year growth for 2023 and 2024, respectively. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 163.7%.
James Hardie Industries: The firm pioneered the development of fiber cement technology in the 1980s. JHX has many product applications, including external siding, trim and fascia, ceiling lining and flooring, partitioning, decorative columns, fencing and drainage pipes.
JHX has seen an upward bottom-line estimate revision of 0.6% and 1.2% for fiscal 2024 and 2025, respectively, over the past seven days to $1.58 and $1.66. The estimated figure indicates 16.2% and 5.1% year-over-year growth for fiscal 2024 and 2025, respectively.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Martin Marietta (MLM) Hits 52-Week High, Aids SOAR 2025 Goals
Martin Marietta Materials, Inc. (MLM - Free Report) has been banking on increased investments in large infrastructure and manufacturing projects. On Dec 15, this producer and supplier of construction aggregates touched a new 52-week high of $499.31.
However, the stock pulled back to end the trading session at $489.94, down 0.63% from the previous day’s closing price of $493.05.
The company has been benefiting from solid pricing across businesses amid low volume. Also, the business-mix portfolio, its discreetly curated coast-to-coast footprint and its prime focus on value-over-volume commercial strategy are commendable.
Impressive Stock Performance
Martin Marietta’s shares have risen 15.9% in the past three months compared with the Zacks Building Products - Concrete and Aggregates industry’s 11.7% growth and the S&P 500 Index’s 5.3% rise. Investors’ sentiments might have been boosted by the solid inflow of public funds for infrastructure and manufacturing activities.
Image Source: Zacks Investment Research
The bottom-line estimate for 2023 moved up to $18.44 per share from $18.33 in the past seven days, indicating 52.8% year-over-year growth. The positive trend signifies bullish analyst sentiments, indicating robust fundamentals and an outperformance in the near term.
Let’s delve deeper into the factors supporting this Zacks Rank #2 (Buy) company.
Strong Q3 Results & Upbeat 2023 Views: MLM posted solid results for third-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimate by 17% and increased 48% on a year-over-year basis. Revenues also rose 10.1% from the prior-year period's level. Martin Marietta expects a significant boost in aggregate demand in the U.S. economy in the remainder of 2023.
Given the improving trends, the company is optimistic that the demand in its end-markets is likely to accelerate upon the moderation of inflation and stable monetary policy. Owing to the tailwinds, it also raised its full-year expectations for adjusted EBITDA and net earnings from continuing operations.
Martin Marietta now expects consolidated products and services revenues to be in the range of $6,735-$6,855 million compared with $6,725-$6,860 million predicted earlier. The company anticipates adjusted EBITDA to be between $2,050 million and $2,150 million, up from the previously projected range of $2,000-$2,100 million.
Total aggregate pricing per ton is anticipated to grow 18-20%, up from the previously anticipated range of 17-19%. Gross profit is expected to be between $1,350 million and $1,410 million, up from $1,330-$1,395 million expected earlier.
Long-Term Plans: Martin Marietta has been gaining strength from long-term strategic plans — Strategic Operating Analysis and Review (“SOAR”) 2025 initiatives. It is to be noted that 2022 marked the 11th year of consecutive growth in consolidated product and service revenues, adjusted gross profit and adjusted EBITDA.
Martin Marietta has been focusing on SOAR plans that include portfolio optimization, assessing business combinations and arrangements with other companies engaged in similar businesses, increasing footprint in core businesses, investing in internal expansion projects in high-growth markets and pursuing new opportunities associated with the existing markets served.
Higher Infrastructural Spending: The U.S. government’s focus on spurring massive infrastructure investments in roads, highways, ports and airports bodes well for aggregate producers like Martin Marietta.
The plan also addresses the issues related to drinking water and wastewater systems, energy and rural infrastructure and veterans’ hospitals, to name a few. This will further propel demand for products sold by companies like MLM. In the near term, it expects affordability-driven headwinds in the single-family residential end market. This will be offset by a significant acceleration in public infrastructure investment and continued strength in large-scale energy, domestic manufacturing and multi-family residential projects.
As of Sep 30, 2023, highway, bridge and tunnel contract awards increased 18.2% to a record of $114 billion compared with $97 billion as of September 2022 end. In the third quarter of 2023, the infrastructure market accounted for 39% of aggregate shipments.
The firm expects infrastructure shipments to grow meaningfully in the future, driven by healthy state Department of Transportation budgets and an anticipated extension or replacement for the Fixing America’s Surface Transportation Act.
Select In-organic Moves: The company has been reviewing its overall portfolio for opportunities to maximize value by monetizing or exchanging select assets. After terminating the agreement with CalPortland for the sale of the Tehachapi California cement plant on May 3, 2023, Martin Marietta finally divested this business to UNACEM Corp. SAA. on Oct 31, 2023. Also, it divested its California-based Stockton cement import terminal on May 3.
In November, it entered into a definitive agreement to divest its South Texas cement business and certain of its related concrete operations to CRH plc’s (CRH - Free Report) subsidiary, CRH Americas Materials, Inc.
After the $2.1 billion worth of divestiture, the assets of the acquirer will include the Hunter cement plant in New Braunfels, a chain of terminals along the eastern Gulf coast of Texas and 20 concrete plants serving the Austin and San Antonio region. The integrated portfolio of these assets is expected to generate pro-forma 2023 EBITDA of nearly $170 million. This transaction is subject to regulatory approval and is expected to close in the first half of 2024.
About CRH
CRH is a provider of building materials solutions with operating locations in 29 countries. It operates in two divisions that are CRH Americas and CRH Europe. In 2022, the Americas division contributed 63% of its global sales and the Europe division contributed 37% of the same. In the third quarter of 2023, both its operating divisions contributed strongly, thus resulting in sales growth year over year.
The firm currently carries a Zacks Rank #2. The Zacks Consensus Estimate for CRH’s 2023 sales and earnings per share indicates growth of 12.4% and 31%, respectively, from the previous year’s reported levels.
Other Stocks to Consider
Two other top-ranked stocks in the Zacks Construction sector are Frontdoor, Inc. (FTDR - Free Report) and James Hardie Industries plc (JHX - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Frontdoor: Based in Memphis, TN, the company provides home service plans in the United States. The firm is benefiting from impressive customer retention rates. Thanks to the robust awareness of the Frontdoor brand, it has been shifting its attention toward capitalizing on customer demand. This strategic move allows FTDR to redirect its marketing investments toward expanding its Direct-to-Consumer channel under the American Home Shield brand.
Looking ahead, the company is committed to establishing a solid foundation by investing in its brand, technology infrastructure and enhancing productivity throughout the organization.
Frontdoor has seen an upward earnings estimate revision to $2.03 and $2.34 per share for 2023 and 2024, respectively, over the past 60 days from $1.65 and $1.89. The estimated figure indicates 59.8% and 15.1% year-over-year growth for 2023 and 2024, respectively. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 163.7%.
James Hardie Industries: The firm pioneered the development of fiber cement technology in the 1980s. JHX has many product applications, including external siding, trim and fascia, ceiling lining and flooring, partitioning, decorative columns, fencing and drainage pipes.
JHX has seen an upward bottom-line estimate revision of 0.6% and 1.2% for fiscal 2024 and 2025, respectively, over the past seven days to $1.58 and $1.66. The estimated figure indicates 16.2% and 5.1% year-over-year growth for fiscal 2024 and 2025, respectively.