Valued at a market cap of $36.4 billion, Martin Marietta Materials, Inc. (MLM) is a natural resource-based building materials company that supplies aggregates and heavy-side building materials to the construction industry. The North Carolina-based company offers crushed stone, sand, and gravel products, ready mixed concrete and asphalt, paving products and services, and Portland and specialty cement.
Shares of this building materials provider have underperformed the broader market over the past 52 weeks. MLM has gained 27.9% over this time frame, while the broader S&P 500 Index ($SPX) has soared 31.8%. Moreover, on a YTD basis, the stock is up 19.4%, compared to SPX’s 25.8% gains.
Narrowing the focus, MLM has outpaced the Materials Select Sector SPDR Fund’s (XLB) 16.4% gain over the past 52 weeks and 10.2% return on a YTD basis.
On Oct. 30, MLM released its Q3 earnings results. The company’s adjusted earnings fell 15% year-over-year to $5.91 per share and missed the consensus estimates of $6.41. Moreover, its revenue declined 5.3% from a year ago to $1.89 billion and fell short of the Wall Street estimates of $1.92 billion.
This weak performance can be primarily attributed to extreme weather events, including hurricanes, which impacted the company’s product shipments and geographic mix. Along with this, MLM lowered its full-year guidance for major metrics. Despite this, shares of MLM jumped 3.6% on Oct. 30 but then declined for two following consecutive trading sessions.
For the current fiscal year, ending in December, analysts expect MLM’s EPS to decline 9% year over year to $17.58. The company’s earnings surprise history is mixed. It surpassed the consensus estimates in two of the last four quarters while missing on two occasions.
However, among the 17 analysts covering the stock, the consensus rating is a “Strong Buy,” which is based on 12 “Strong Buy,” two “Moderate Buy,” and three “Hold” ratings.
The configuration is significantly more bullish than three months ago, with nine analysts suggesting a “Strong Buy.”
On Nov. 27, JPMorgan upgraded MLM to an “Overweight” rating and raised its price target to $640, which indicates a modest 7.4% upside potential from the current levels.
The mean price target of $647.32 represents an 8.7% upside from MLM’s current price levels, while the Street-high price target of $730 suggests a notable upside potential of 22.6%.
