Martin Marietta (MLM) Up 6.2% Since Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Martin Marietta Materials, Inc. (NYSE:MLM) . Shares have added about 6.2% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is MLM due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Recent Earnings

Martin Marietta Materials, Inc. reported dismal first-quarter 2018 results, with earnings missing the Zacks Consensus Estimate and also declining year over year.

Earnings per share of 16 cents missed the Zacks Consensus Estimate of 25 cents by 36%. Earnings also declined 76.1% from the prior-year quarter.

Total revenues of $802 million surpassed the consensus mark by a meager 0.3% but fell 5% year over year. Freight and delivery revenues totaled $48.7 million, down 5.6% year over year.

Segment Discussion

The Building Materials business includes aggregates, cement, ready mixed concrete, asphalt and paving product lines.

The segment’s total revenues were down 5.5% to $732.7 million. Aggregates total revenues fell 5.8% to $425 million. Ready Mixed Concrete total revenues fell nearly to $218.5 million from $222.3 million in the prior-year quarter. Cement revenues also declined to $89.2 million from $93.6 million in the year-ago quarter. Asphalt and paving product lines revenues fell 24.4% to $16.4 million.

Shipments (volume) in the aggregates product line declined 7.9% as colder-than-normal weather restricted outdoor contractors to work during the winter.

Geographically, West Groups’ aggregate shipments dropped 9.9%. The Southeast Group reported a 12.4% fall in volumes due to extreme winter weather and poor railroad performance.

The Magnesia Specialties segment — which includes magnesium oxide, magnesium hydroxide and dolomite lime products — reported total revenues of $265 million, down 1.9% year over year.

Margins

Consolidated gross margin contracted 360 bps to 13.8%.

Financials

Martin Marietta ended the quarter with cash and cash equivalents of $1,422.4 million as of Mar 31, 2018 compared with $1,446.4 million as of Dec 31, 2017.

As of Mar 31, 2018, 62.9 million shares of the company’s common stock were outstanding and 14.7 million remain under the current repurchase authorization.

2018 Guidance

Total revenues are expected in the band of $4.3-$4.5 billion (versus $4.2-$4.4 billion expected earlier).

Gross profit is projected in the range of $1.1-$1.12 million ($1.04-$1.14 million projected earlier).

Aggregates Product line total revenues are projected in the range of $2.63-$2.74 billion ($2.5-$2.6 billion expected earlier). Aggregates volume is expected in the range of 11-14% (4-6% projected earlier).

Cement total revenues are estimated in the band of $415-$445 million.

Magnesia Specialties Business net sales are expected between $265 million and $270 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been three revisions higher for the current quarter.

VGM Scores

At this time, MLM has an average Growth Score of C, however its Momentum is doing a lot better with an A. The stock was also allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is more suitable for momentum investors than those looking for value and growth.

Outlook

Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. Interestingly, MLM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.