We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
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.
Is VMC Worth Buying as Pricing Strength Meets a Premium Valuation?
Read MoreHide Full Article
Key Takeaways
Vulcan's mix-adjusted aggregates pricing rose 5%, lifting cash gross profit per ton to $12.02.
VMC sees public infrastructure and data center projects supporting demand despite weak housing activity.
Vulcan faces diesel inflation, weather disruptions and a premium valuation that raises the execution hurdle.
Vulcan Materials Company (VMC - Free Report) continues to improve aggregates unit economics. Second-quarter pricing rose, cash gross profit per ton increased and public infrastructure plus large private projects supported demand despite elevated diesel costs.
The investor question is whether that execution offsets a premium valuation. Residential weakness, weather disruption and energy inflation keep the near-term setup mixed, even as management expects pricing and cost trends to improve.
VMC Pricing Keeps Unit Profitability Moving Higher
Mix-adjusted aggregates pricing increased 5% in the second quarter, while cash gross profit per ton rose to $12.02 from $11.88. Unit cash costs increased 7%, with diesel a major contributor.
Vulcan targets 4-6% aggregate price growth for 2026 and expects to finish near the high end of the range. Management also expects cost growth to decelerate, supporting further unit-profitability gains.
Vulcan's Public Backlog Supports Volume Visibility
Aggregates shipments increased 1% in the second quarter and 3% in the first half despite disruptive weather. Trailing 12-month highway awards in Vulcan markets remained up double digits, while other public infrastructure awards increased 20%.
Management expects work already in the pipeline to support public shipments for several years. That visibility is meaningful because publicly funded construction has historically represented about 40-55% of aggregates shipments. Martin Marietta Materials, Inc. (MLM - Free Report) , another U.S. aggregates supplier, said its second-quarter organic shipment growth was driven by infrastructure and heavy nonresidential demand.
VMC's Large Projects Broaden Private Demand
Data centers remain the leading private non-residential catalyst. Power generation, transmission, liquefied natural gas and manufacturing projects are appearing in quoting and booking activity, while warehouse activity remains broadly flat.
Lighter construction tied to housing remains weak. CRH plc (CRH - Free Report) agreed in June to acquire Arcosa, a deal CRH said would reinforce its U.S. aggregates position and infrastructure exposure.
Vulcan's Premium Valuation Raises the Hurdle
VMC trades at a forward 12-month price-to-earnings ratio of 27.86, compared with 20.91 for its Zacks sub-industry, 20.28 for the Zacks sector and 20.69 for the S&P 500.
The ratio is slightly below Vulcan's five-year median of 28.68, so it is not unusually high by the company's history. Still, the premium to broader benchmarks raises the execution hurdle.
VMC Still Faces Housing, Weather and Energy Risks
Single-family and broader residential construction remain weak because of affordability constraints. Weather also can disrupt quarry production, transportation and customer schedules, creating uneven shipment and margin comparisons.
Diesel produced a $26 million second-quarter headwind, part of almost $40 million of energy-related inflation. Management said third-quarter gross margins may remain below the prior-year level before improving in the fourth quarter.
Total debt to trailing-12-month adjusted EBITDA stood at 1.9 times, below management's 2-2.5-times target range. Vulcan also had $1.58 billion of available capacity under its unsecured credit line.
That flexibility supports aggregates-focused acquisitions, internal investment and shareholder returns without requiring a more aggressive leverage profile. The acquisition pipeline remains active as Vulcan balances reinvestment with capital returns.
VMC has a Value Score of D and a VGM Score of D, alongside a Growth Score of C and a Momentum Score of C. Since higher Style Score grades are more favorable, these readings do not strengthen an aggressive buy case.
View the Zacks #1 Rank List
Image: Bigstock
Is VMC Worth Buying as Pricing Strength Meets a Premium Valuation?
Key Takeaways
Vulcan Materials Company (VMC - Free Report) continues to improve aggregates unit economics. Second-quarter pricing rose, cash gross profit per ton increased and public infrastructure plus large private projects supported demand despite elevated diesel costs.
The investor question is whether that execution offsets a premium valuation. Residential weakness, weather disruption and energy inflation keep the near-term setup mixed, even as management expects pricing and cost trends to improve.
VMC Pricing Keeps Unit Profitability Moving Higher
Mix-adjusted aggregates pricing increased 5% in the second quarter, while cash gross profit per ton rose to $12.02 from $11.88. Unit cash costs increased 7%, with diesel a major contributor.
Vulcan targets 4-6% aggregate price growth for 2026 and expects to finish near the high end of the range. Management also expects cost growth to decelerate, supporting further unit-profitability gains.
Vulcan Materials Company Price and Consensus
Vulcan Materials Company price-consensus-chart | Vulcan Materials Company Quote
Vulcan's Public Backlog Supports Volume Visibility
Aggregates shipments increased 1% in the second quarter and 3% in the first half despite disruptive weather. Trailing 12-month highway awards in Vulcan markets remained up double digits, while other public infrastructure awards increased 20%.
Management expects work already in the pipeline to support public shipments for several years. That visibility is meaningful because publicly funded construction has historically represented about 40-55% of aggregates shipments. Martin Marietta Materials, Inc. (MLM - Free Report) , another U.S. aggregates supplier, said its second-quarter organic shipment growth was driven by infrastructure and heavy nonresidential demand.
VMC's Large Projects Broaden Private Demand
Data centers remain the leading private non-residential catalyst. Power generation, transmission, liquefied natural gas and manufacturing projects are appearing in quoting and booking activity, while warehouse activity remains broadly flat.
Lighter construction tied to housing remains weak. CRH plc (CRH - Free Report) agreed in June to acquire Arcosa, a deal CRH said would reinforce its U.S. aggregates position and infrastructure exposure.
Vulcan's Premium Valuation Raises the Hurdle
VMC trades at a forward 12-month price-to-earnings ratio of 27.86, compared with 20.91 for its Zacks sub-industry, 20.28 for the Zacks sector and 20.69 for the S&P 500.
The ratio is slightly below Vulcan's five-year median of 28.68, so it is not unusually high by the company's history. Still, the premium to broader benchmarks raises the execution hurdle.
VMC Still Faces Housing, Weather and Energy Risks
Single-family and broader residential construction remain weak because of affordability constraints. Weather also can disrupt quarry production, transportation and customer schedules, creating uneven shipment and margin comparisons.
Diesel produced a $26 million second-quarter headwind, part of almost $40 million of energy-related inflation. Management said third-quarter gross margins may remain below the prior-year level before improving in the fourth quarter.
Vulcan's Balance Sheet Preserves Strategic Flexibility
Total debt to trailing-12-month adjusted EBITDA stood at 1.9 times, below management's 2-2.5-times target range. Vulcan also had $1.58 billion of available capacity under its unsecured credit line.
That flexibility supports aggregates-focused acquisitions, internal investment and shareholder returns without requiring a more aggressive leverage profile. The acquisition pipeline remains active as Vulcan balances reinvestment with capital returns.
VMC's Mixed Scores Support a Patient Stance
VMC's operating fundamentals remain constructive, but the valuation and near-term risks favor patience over urgency. The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
VMC has a Value Score of D and a VGM Score of D, alongside a Growth Score of C and a Momentum Score of C. Since higher Style Score grades are more favorable, these readings do not strengthen an aggressive buy case.