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Martin Marietta (MLM): What's in Store this Earnings Season?
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We expect Martin Marietta Materials, Inc. (MLM - Free Report) to beat expectations when it reports second-quarter 2016 results on Aug 2, before the opening bell.
Last quarter, the company posted a massive 122.58% positive earnings surprise. However, the producer of construction aggregates and other construction materials has delivered negative earnings surprises in three of the last four quarters with an average of 19.65%.
Let’s see how things are shaping up prior to this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Martin Marietta is likely to beat earnings because it has the right combination of two key components required for a beat.
Zacks ESP: Martin Marietta’s Earnings ESP, which represents the difference between the Most Accurate estimate of $2.08 and the Zacks Consensus Estimate of $2.04, stands at +1.96%. This is meaningful and indicates a likely positive earnings surprise.
Zacks Rank: Martin Marietta has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) and 3 have a significantly higher chance of beating earnings. Conversely, the Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of Martin Marietta’s Zacks Rank #3 and +1.96% ESP makes us reasonably confident of an earnings beat.
What's Driving the Better-than-Expected Earnings?
Martin Marietta performance was below expectations in 2015. Nevertheless, the company did well in the first quarter of 2016, reporting strong revenues and margins.
This year, the company anticipates better volume growth in its key end markets — infrastructure and non-residential construction.
An improving economy and job growth are expected to boost private construction activities in the U.S. In the non-residential construction market, management expects shipments to increase in both the light and heavy construction sectors. Moreover, management expects better infrastructure activity in 2016.
A multi-year highway bill (five-year, $305 billion FAST Act) was enacted in Dec 2015, which increases funding certainty for state transportation programs. Together with state initiatives to finance infrastructure projects, this should lead to increased aggregate-intensive infrastructure activity in the second quarter and thereafter, thereby boosting demand for aggregates. This should support volume growth in Martin Marietta’s Aggregates segment.
In addition, robust pricing gains and synergies from the Texas Industries acquisition should drive growth in the second quarter and beyond.
Stocks to Consider
Here are some companies in the construction sector that can be considered as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Louisiana-Pacific Corp. (LPX - Free Report) , with an Earnings ESP of +4.00% and a Zacks Rank #1.
Owens Corning (OC - Free Report) , with an Earnings ESP of +9.41% and a Zacks Rank #1.
Vulcan Materials Company (VMC - Free Report) with an Earnings ESP of +1.01% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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Martin Marietta (MLM): What's in Store this Earnings Season?
We expect Martin Marietta Materials, Inc. (MLM - Free Report) to beat expectations when it reports second-quarter 2016 results on Aug 2, before the opening bell.
Last quarter, the company posted a massive 122.58% positive earnings surprise. However, the producer of construction aggregates and other construction materials has delivered negative earnings surprises in three of the last four quarters with an average of 19.65%.
MARTIN MRT-MATL Price and EPS Surprise
MARTIN MRT-MATL Price and EPS Surprise | MARTIN MRT-MATL Quote
Let’s see how things are shaping up prior to this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Martin Marietta is likely to beat earnings because it has the right combination of two key components required for a beat.
Zacks ESP: Martin Marietta’s Earnings ESP, which represents the difference between the Most Accurate estimate of $2.08 and the Zacks Consensus Estimate of $2.04, stands at +1.96%. This is meaningful and indicates a likely positive earnings surprise.
Zacks Rank: Martin Marietta has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) and 3 have a significantly higher chance of beating earnings. Conversely, the Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of Martin Marietta’s Zacks Rank #3 and +1.96% ESP makes us reasonably confident of an earnings beat.
What's Driving the Better-than-Expected Earnings?
Martin Marietta performance was below expectations in 2015. Nevertheless, the company did well in the first quarter of 2016, reporting strong revenues and margins.
This year, the company anticipates better volume growth in its key end markets — infrastructure and non-residential construction.
An improving economy and job growth are expected to boost private construction activities in the U.S. In the non-residential construction market, management expects shipments to increase in both the light and heavy construction sectors. Moreover, management expects better infrastructure activity in 2016.
A multi-year highway bill (five-year, $305 billion FAST Act) was enacted in Dec 2015, which increases funding certainty for state transportation programs. Together with state initiatives to finance infrastructure projects, this should lead to increased aggregate-intensive infrastructure activity in the second quarter and thereafter, thereby boosting demand for aggregates. This should support volume growth in Martin Marietta’s Aggregates segment.
In addition, robust pricing gains and synergies from the Texas Industries acquisition should drive growth in the second quarter and beyond.
Stocks to Consider
Here are some companies in the construction sector that can be considered as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Louisiana-Pacific Corp. (LPX - Free Report) , with an Earnings ESP of +4.00% and a Zacks Rank #1.
Owens Corning (OC - Free Report) , with an Earnings ESP of +9.41% and a Zacks Rank #1.
Vulcan Materials Company (VMC - Free Report) with an Earnings ESP of +1.01% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>