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Is a Beat in Store for Martin Marietta's (MLM) Q3 Earnings?

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Martin Marietta Materials, Inc. (MLM - Free Report) is scheduled to report third-quarter 2019 results on Oct 29, before the opening bell.

In the last reported quarter, the company’s earnings and revenues missed the Zacks Consensus Estimate by 2.3% and 0.6%, respectively. However, on a year-over-year basis, earnings and revenues of this aggregates producer grew 3.1% and 6.4%, respectively, mainly attributable to a 10% increase in aggregate shipments and continued pricing momentum across the Building Materials business.

Markedly, Martin Marietta reported better-than-expected earnings in two of the last four quarters, with the average positive surprise being 34.3%.

How are Estimates Faring?

Let’s take a look at the estimate revision trend in order to get a clear picture of what analysts are thinking about the company prior to the earnings release.

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has increased from $3.45 to $3.50 over the past seven days. The estimated figure indicates an increase of 22.8% from $2.85 per share reported in the year-ago quarter. Revenues are expected to be $1.25 billion, up 9.3% from the year-ago reported figure of $$1.14 billion.

Factors to Consider

Martin Marietta — similar to other aggregate producers Summit Materials, Inc. (SUM - Free Report) , Vulcan Materials Company (VMC - Free Report) and Eagle Materials Inc. (EXP - Free Report) — is expected to have generated strong third-quarter earnings, given solid underlying demand from infrastructural projects, favorable weather and easy comparisons (as the company was negatively impacted by hurricanes last year in both Texas and Southeast).

Increased infrastructure activity, primarily in the public sector (arising from public funding for highways), is expected to have helped Martin Marietta to generate higher revenues. Notably, the infrastructure market represented 37% of its second-quarter aggregate shipments.

Large energy sector projects along the Texas and Gulf Coast are expected to have boosted demand for heavy building materials, and helped Martin Marietta to generate higher sales. Again, healthy commercial construction activities like growth in distribution center, warehouse, data center and wind turbine projects in the non-residential market (which represented 37% of second-quarter aggregate shipments) are expected to have aided Martin Marietta’s third-quarter performance. Also, solid residential construction (which accounted for 21% of second-quarter aggregate shipments) is expected to have reflected in the company’s geographic footprint, given lower mortgage rates.

Moreover, disciplined cost structure and favorable pricing are expected to have provided a meaningful boost to its third-quarter margins.

What Our Model Indicates

Our proven model predicts an earnings beat for Martin Marietta this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Currently, it has a Zacks Rank #2 and an Earnings ESP of +1.77%. You can see the complete list of today’s Zacks #1 Rank stocks here.

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