A month has gone by since the last earnings report for Martin Marietta (MLM - Free Report) . Shares have added about 5.7% 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 catalysts.
Martin Marietta's (MLM - Free Report) Q4 Earnings Miss Estimate
Martin Marietta Materials, Inc. reported fourth-quarter 2018 results, wherein adjusted earnings of $1.66 per share missed the Zacks Consensus Estimate of $1.71 by 2.9%. Also, the reported figure decreased 11.7% from the year-ago level of $1.88 per share.
Nevertheless, total revenues (including Products and services revenues as well as Freight revenues) of $1,020.2 million increased 5.1% year over year.
The Building Materials business includes aggregates, cement, ready-mixed concrete, asphalt and paving product lines.
The segment’s total revenues grew 5% from the prior-year quarter to $948.2 million. Product and services revenues amounted to $888.8 million compared with $849 million a year ago. Freight revenues totaled $59.4 million, up from $54 million in the year-earlier period.
Within the Product and services, Aggregates’ total revenues increased 12% from the year-ago quarter to $577.6 million. However, Ready Mixed Concrete total revenues declined 7.9% to $213.3 million from $231.6 million a year ago. Cement revenues also decreased to $87.3 million from $90.3 million in the year-ago quarter. Asphalt and paving product lines revenues fell 10% to $69.2 million from $76.9 million a year ago.
Heritage aggregates pricing improved 2.3%, while shipments declined marginally in the reported quarter. Meanwhile, after deducting the divested business shipments from the prior-year figure, the said metric increased 0.5% year over year.
Geographically, West Groups’ aggregate shipments decreased 1.2% from a year ago due to record October rainfall in Texas, as well as project delays in Colorado. The Southeast Group heritage operation also reported a 3.2% fall, given weather-related adversity in Georgia and Florida. However, after deducting prior year’s divested business impact, the said figure increased 1.9%.
Moreover, Mid-America Group heritage operations’ shipment grew 1.6% from the prior-year period owing to various large industrial projects in the Mideast Division, partially offset by delays in several large public and private construction projects in the Carolinas due to severe weather conditions.
The Magnesia Specialties segment, which includes magnesium oxide, magnesium hydroxide and dolomite lime products, reported total revenues of $72 million, up 6.7% year over year. The upside was driven by growth in both chemicals and lime businesses.
Consolidated gross margin contracted 440 bps to 22.3%. Its adjusted earnings from operations declined 18.3% from the year-ago level to $159.5 million. Also, adjusted EBITDA of $267.7 million decreased 5.9% year over year.
Liquidity and Cash Flow
Martin Marietta's cash and cash equivalents as of Dec 31, 2018 were $44.9 million compared with $1,446.4 million recorded in the corresponding period of 2017. Net cash provided by operations came in at $705.1 million at the end of fourth-quarter 2018 compared with $657.6 million at third-quarter end.
For the full year of 2018, earnings per share of $7.43 (on a GAAP basis) declined 34% year over year. However, revenues increased 7% from the prior-year figure to $4.24 billion. Adjusted gross profit also increased 1.4% from the year-ago figure to $985.3 million.
Total revenues in 2019 are expected in the band of $4.480-$4.680 billion. The company expects capital expenditure in the range of $350-$400 million. Gross profit is projected in the range of $1,110-$1,210 million. The company expects EBITDA within $1.17-1.28 billion.
Aggregates Product line total revenues are projected in the range of $2.80-$2.91 billion. Aggregates volume growth is expected in the range of 6-8%. Average selling price is likely to grow 3-5%.
Cement total revenues are estimated in the band of $420-$450 million. Ready Mixed Concrete and Asphalt and Paving’s total revenues are anticipated within $1.24-$1.31 billion.
The company expects Magnesia Specialties Business net sales between $290 million and $300 million.
Within Aggregates, Infrastructure shipments are likely to grow in high-single digits. Non-residential shipments are also projected to increase in mid-high single digits. Moreover, residential shipments are expected to rise in mid-single digits. ChemRock/Rail shipments are likely to be slightly up from the prior-year figure.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -31.56% due to these changes.
Currently, Martin Marietta has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Martin Marietta has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.