Martin Marietta (MLM) Q3 Earnings: What's In The Cards?

Martin Marietta Materials, Inc. (NYSE:MLM) is set to report third-quarter fiscal 2016 results on Nov 1, before market opens.

Last quarter, the company posted a negative earnings surprise of 6.86%. Meanwhile, it missed estimates in three out of the past four quarters but managed to record an average positive surprise of 24.11%, courtesy of the stellar performance in the March quarter.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Martin Marietta posted lower-than-expected results in the second quarter – missing the Zacks Consensus Estimate for both earnings and sales. The company’s volumes, chiefly for Cement and Aggregates, were hurt by bad weather and project delays in key markets like Texas, North Carolina and Colorado. The company expects Hurricane activity to affect the upcoming results since it is most active during the third and fourth quarters.

MARTIN MRT-MATL Price and EPS Surprise

MARTIN MRT-MATL Price and EPS Surprise | MARTIN MRT-MATL Quote

Texas accounts for almost one-third of Martin Marietta’s business post the Texas Industries acquisition. Here, though multi-year energy-related projects remain strong, direct shipments to the shale fields in South Texas are currently low owing to reduced oil prices.

However, the company is encouraged by the positive trends seen this year in the markets it serves. Nonresidential construction is expected to increase in both the heavy industrial and the commercial sectors. Also, residential construction is expected to continue to experience good growth metrics.

Based on these trends and expectations, including a return to normal weather patterns, the company anticipates achieving growth in the infrastructure, non-residential and residential markets in 2016. This should reflect on the upcoming results as well.

For the fiscal third quarter, the Zacks Consensus Estimate for earnings is pegged at $2.72, reflecting a 33.6% year-over-year increase. Meanwhile, our estimate for revenues is pegged at $1.06 billion, implying a 5.1% increase.

Earnings Whispers

Our proven model does not conclusively show that Martin Marietta will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.

Zacks ESP: The earnings ESP is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $2.72. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Martin Marietta carries a Zacks Rank #5 (Strong Sell). Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies in the construction industry that can be considered as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases:

Louisiana-Pacific Corporation (NYSE:LPX) , slated to report third-quarter 2016 results on Oct 31, has an earnings ESP of +5.13% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Armstrong World Industries Inc. (NYSE:AWI) , slated to report third-quarter 2016 results on Oct 31, has an earnings ESP of +1.32% and a Zacks Rank #2.

Thor Industries Inc. (NYSE:THO) has an earnings ESP of +3.25% and a Zacks Rank #3. The company is scheduled to release third-quarter 2016 results on Dec 5.

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