It has been about a month since the last earnings report for Martin Marietta (MLM Quick QuoteMLM - Free Report) . Shares have added about 13.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Martin Marietta due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Martin Marietta’s Q4 Earnings Beat, Revenues Lag Estimates

Martin Marietta Materials, Inc. reported mixed fourth-quarter 2023 results, with earnings surpassing the Zacks Consensus Estimate and increasing on a year-over-year basis. Revenues missed the consensus mark but rose year over year.

Going forward, MLM anticipates strong demand for infrastructure, large-scale energy and domestic manufacturing projects. This will largely offset weaker residential demand and the anticipated softening in light non-residential activity. With mortgage rates stabilizing and affordability headwinds receding, MLM fully expects single-family residential construction to recover, as demand still exceeds supply, particularly in its key markets.

Inside the Headlines

Martin Marietta reported earnings from continuing operations of $4.63 per share, surpassing the Zacks Consensus Estimate of earnings of $3.96 per share by 16.9%. Also, the metric increased 53.8% from the year-ago quarter’s adjusted earnings level of $3.01 per share.

Quarterly revenues of $1.61 billion missed the consensus mark of $1.64 billion by 2.1%. However, the metric rose 8.9% from the year-ago period’s levels.

Segmental Discussion

Building Materials (including aggregates, cement, ready-mixed concrete, asphalt, paving product lines and Freight) reported fourth-quarter revenues of $1.53 billion, up 8.9% year over year. The segment’s gross margin improved by 650 basis points (bps) to 30.3% year over year, backed by favorable pricing.

Within the Building Materials’ product and services umbrella, Aggregates’ revenues rose 9.4% to $1.02 billion from the year-ago quarter’s levels. Cement revenues increased 6.1% year over year to $199.1 million. Ready Mixed Concrete’s revenues increased 12% year over year to $232.8 million. Revenues in Asphalt and Paving product lines increased 13.3% from the year-ago quarter’s levels to $228.4 million.

Aggregates shipments fell 2.1% year over year due to the company's value-over-volume strategy and moderating demand from the affordability-driven residential slowdown, along with a softening in warehouse and data center construction. However, pricing advanced 15%. Aggregates gross profit in the quarter increased 36.8% to $328.6 million year over year.

Cement shipments were on par with the prior-year quarter’s levels, while pricing increased 16.6% year over year. The Cement gross profit rallied 46% from the prior-year quarter’s figure. Within the Downstream business, ready mixed concrete shipments were on par with the prior-year quarter’s figure, while Asphalt shipments rose 14.3% in the quarter.

Magnesia Specialties reported revenues of $76 million, up 9.2% year over year, driven by strong pricing gains in both chemicals and lime product lines, as well as improved demand for lime products. This was offset by lower demand for chemical products. The gross profit margin increased 150 bps to 30.3% on the back of higher pricing and moderation of energy expenses.

Operating Highlights

The gross profit increased 36.5% year over year to $438.5 million. The adjusted gross margin was 30.1%, which notably increased 610 bps year over year. Adjusted EBITDA of $502.6 million increased 28.3% year over year.

2023 Highlights

Earnings from continuing operations increased to $19.32 per share from $13.7 per share in 2022. Total revenues were $6,777.2 million, up from $6,160.7 million in 2022. Adjusted EBITDA was $2,127.7 million, up from $1,600.3 million in 2022.

Liquidity and Cash Flow

As of Dec 31, 2023, Martin Marietta had unrestricted cash and cash equivalents of $1.27 billion compared with $358 million at 2022-end. It had $1.20 billion of unused borrowing capacity on its existing credit facilities at 2023-end. Long-term debt (excluding current maturities) was $3,945.6 million, down from $4,340.9 million at the 2022-end. Net cash provided by operations was $1.53 billion in 2023, up from $991.2 million in the year-ago period.

2024 Guidance

Martin Marietta expects consolidated products and services revenues of $6,745-$7,185 million. Adjusted EBITDA is projected to be between $2,140 million and $2,340 million. Interest expenses are likely to be $55-65 million and the tax rate is projected to be 21-22%. Net earnings from continuing operations attributable to Martin Marietta are anticipated to be $1,205-$1,385 million. Capital expenditures are anticipated to be $650-700 million. Within the Building Materials business, total aggregate shipment growth is now expected to be between down 2% and up 2%. Total aggregate pricing per ton is anticipated to rise 10-12%. Gross profit is expected to be between $1,610 million and $1,730 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

The consensus estimate has shifted -14.17% due to these changes.

VGM Scores

At this time, Martin Marietta has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Martin Marietta has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.