Raleigh, North Carolina-based Martin Marietta Materials, Inc. (MLM), a natural resource-based building materials company, supplies aggregates and heavy-side building materials to the construction industry. With a market cap of $32.7 billion, the company also manufactures and markets magnesia-based products, including heat-resistant refractory products for the steel industry, chemical products for industrial and environmental uses, and dolomitic lime.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and MLM perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the building materials industry.
MLM cements its aggregates industry leadership through a robust presence in strategic markets. Its diversified portfolio, featuring cement and magnesia specialties, buffers against market fluctuations. Besides, the acquisition of AFS strengthens MLM's Colorado foothold, illustrating the company's targeted growth strategy, which expands its footprint and streamlines distribution.
Despite its notable strength, MLM slipped 15.5% from its 52-week high of $626.67, achieved on Apr. 8. Over the past three months, MLM stock has declined 6.5%, underperforming the Nasdaq Composite’s ($NASX) marginal dip during the same time frame.
Over the longer term, shares of MLM rose 6.2% on a YTD basis and climbed 24.6% over the past 52 weeks, underperforming NASX’s YTD gains of 17.2% and solid 28.3% returns over the last year.
To confirm the bearish trend, MLM has been trading below its 50-day and 200-day moving averages since August end.
The underperformance of MLM can be largely attributed to various factors, including historic levels of precipitation in Texas and the Midwest, ongoing restrictive monetary policy, and decreased product demand in the private construction sector. Additionally, shipments were impacted by inclement weather in Texas and the Central Division, as well as the divestiture of the South Texas cement plant.
On Aug. 8, MLM shares closed up marginally after reporting its Q2 earnings results. Its EPS came to $4.76, down 15% year over year. The company’s revenue was $1.76 billion, falling short of Wall Street forecasts of $1.81 billion. MLM expects full-year revenue to be between $6.5 billion to $6.9 billion.
In the competitive arena of building materials, Vulcan Materials Company (VMC) has taken the lead over MLM, showing resilience with a 7% uptick on a YTD basis. However, VMC shares lagged behind the stock with 15.3% gains over the past 52 weeks.
Wall Street analysts are moderately bullish on MLM’s prospects. The stock has a consensus “Moderate Buy” rating from the 15 analysts covering it, and the mean price target of $625.03 suggests a potential upside of 18% from current price levels.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
