Yahoo Finance Martin Marietta (MLM) Reaches 52-Week High: Pricing Strong
Martin Marietta Materials, Inc. MLM touched a new 52-week high of $407.78 on May 17, 2023. The stock pulled back to end the trading session at $407.37, up 1.22% from the previous day’s closing price of $402.47.
The company has been benefiting from solid pricing across businesses amid low volume. Also, the solid execution of its strategic business plan and resilient aggregate-led business is a major contributor.
Stock Performance
Martin Marietta’s stock has gained 14.2% in the past month compared with the Zacks Building Products - Concrete and Aggregates industry’s 12.4% growth and the Zacks Construction sector’s 1.7% rise, and against the S&P 500 Index’s 0.4% fall.
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Investors’ sentiment is expected to have received a boost from higher public infrastructure investment and continued strength in large-scale energy, domestic manufacturing, and multi-family residential projects.
Earnings estimates for 2023 moved up to $15.84 per share from $14.84 in the past 30 days, suggesting 31.2% year-over-year growth. The positive trend signifies bullish analyst sentiments, indicating robust fundamentals and sparking the expectation of outperformance in the near term.
Although continued inflationary pressure and a slowdown in single-family residential construction are pressing concerns, MLM sees solid near-term product demand reinforced by healthy customer backlogs across the coast-to-coast footprint, led by infrastructure and heavy non-residential projects of scale.
Additionally, builder sentiment has improved in Martin Marietta geographies as the single-family housing shortage continues to drive a base level of demand in key Sun Belt markets. It also expects stabilized mortgage rates to boost residential activity in the next several months.
Let’s delve deeper into the factors influencing this Zacks Rank #1 (Strong Buy) company. You can see the complete list of today’s Zacks #1 Rank stocks here.
Strong Q1 Results & 2023 Views: MLM posted solid results for first-quarter 2023. Earnings remarkably surpassed the Zacks Consensus Estimate by 118.2% and increased a whopping 453.8% on a year-over-year basis. Revenues beat the same by 14.2% and rose 10% from the prior year.
The adjusted gross margin of 22.4% increased from 12.7% a year ago. The adjusted EBITDA margin was also up 790 bps from a year ago.
Martin Marietta expects 2023 consolidated revenues of $6,600-$6,815 million, up from $6,180-$6,370 million stated earlier. The company anticipates adjusted EBITDA between $1,800 million and $1,900 million. In 2022, total revenues were $6,160.7 million and adjusted EBITDA was $1,600.3 million. Within the Building Materials business, total aggregate pricing per ton is anticipated to grow 13-15%.
Higher Infrastructural Spending: Martin Marietta, and other concrete and aggregates producers are expected to benefit from strong global trends in infrastructure modernization, energy transition, national security, and a potential super-cycle in global supply-chain investments. The need to rebuild the nation’s deteriorating roads and bridges is expected to help MLM.
The company expects a diverse mix of federal projects for road and bridge work, water control, harbors and ports, and the power grid to drive growth in 2023. MLM anticipates substantial opportunities in 2023 across federally funded infrastructure projects, industrial manufacturing, energy and power. It expects to deliver another year of profitable growth, a strong cash flow and attractive returns for shareholders.
In the near term, the company expects affordability-driven headwinds in the single-family residential end market. This will be offset by a significant acceleration in public infrastructure investment, and continued strength in large-scale energy, domestic manufacturing and multi-family residential projects.
Long-Term Plans: Martin Marietta has been gaining strength from long-term strategic plans — markedly SOAR (Strategic Operating Analysis and Review) 2025 initiatives. It is noted that 2022 marked the 11th year of consecutive growth in consolidated product and service revenues, adjusted gross profit, and adjusted EBITDA.
Martin Marietta has been focusing on SOAR plans that include portfolio optimization, assessing business combinations and arrangements with other companies engaged in similar businesses, increasing footprint in core businesses, investing in internal expansion projects in high-growth markets, and pursuing new opportunities associated with the existing markets served.
Select Inorganic Moves: The company has been reviewing its overall portfolio for opportunities to maximize value by monetizing or exchanging select assets. Consistent with this approach, it divested its cement import operations in California on May 3. Also, it terminated the agreement with CalPortland for the sale of MLM’s Tehachapi, CA, cement plant and related distribution terminals.
Stocks That Also Hit 52-Week High From the Broader Construction Sector
Apart from MLM, D.R. Horton DHI, Owens Corning Inc. OC and Toll Brothers Inc. TOL reached new 52-week highs of $112.88, $109.62 and $65.83 on May 17. All three stocks pulled back to end the trading session, up 0.44%, 2.28% and 0.77%, respectively, from the previous day’s closing price.
Based in Texas, D.R. Horton is one of the leading national homebuilders, primarily engaged in the construction, and sale of single-family houses in the entry-level and move-up markets. Its operations are spread across 110 markets in 33 states in the East, Midwest, Southeast, South Central, Southwest and West regions of the United States.
The company has a long-term earnings growth expectation of 15.5% and delivered a trailing four-quarter earnings surprise of 15.3%, on average. D.R. Horton sports a Zacks Rank #1.
Owens Corning is a world leader in building material systems and composite solutions. OC’s products include glass fiber that is used to support composite materials for transportation, electronics, marine, infrastructure, wind energy and other high-performance markets for insulation, as well as roofing for residential, commercial and industrial applications. OC has three reportable segments — Composites, Insulation and Roofing.
On Dec 2, 2022, Owens Corning declared that its shareholders would receive a dividend of $0.52 per share on Jan 19, 2023. It has a dividend yield of 2.3%. Over the past 5 years, OC has increased its dividend six times and its payout ratio presently stays at 11% of earnings.
Based in Horsham, PA, Toll Brothers is a leading builder of luxury homes. The company has been benefiting from its strategy of broadening its product lines, price points and geographies. Also, it has been gaining from the lack of competition in the luxury new home market, its build-to-order approach and a solid backlog.
TOL currently carries a Zacks Rank #2 (Buy). Earnings estimates for fiscal 2023 have increased to $8.66 per share from $7.87 over the past 30 days. Shares of the company have gained 13.3% in the past three months.
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