MLM - Embedded Expectations Analysis - 2018 03 19
Martin Marietta Materials (MLM:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) Earnings, with a 27.2x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about volumes, pricing, and their recent acquisitionSpecifically, management may be downplaying concerns about volume reductions in cement, and may lack confidence in the sustainability of pricing and volume growth in their Southeast Group. Additionally, they may lack confidence in the sustainability of revenue improvements in their Magnesia Specialties business, and may be downplaying concerns about their recent bond issuance. Furthermore, they may be exaggerating their expectation for Bluegrass Materials to be accretive to earnings per share and cash flow in the first year of ownership, and may have concerns about the sustainability of EBITDA improvements
Martin Marietta Materials is a natural resource-based building materials company. The company supplies aggregates (crushed stone, sand and gravel) through its network of quarries, mines and distribution yards. The company also provides cement and downstream products, namely, ready mixed concrete, asphalt and paving services. The company conducts its Building Materials business through three segments: Mid-America Group, Southeast Group and West Group. The Mid-America and Southeast Groups provide aggregates products only. The West Group provides aggregates, cement and downstream products. The company also has the Magnesia Specialties segment, which includes its magnesia-based chemicals and dolomitic lime businesses.
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