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Martin Marietta (MLM) to Post Q1 Earnings: What's in Store?

Zacks Equity Research

Martin Marietta Materials, Inc. MLM is scheduled to report first-quarter 2019 results on Apr 30, before the opening bell.

In the last reported quarter, while the company’s top line surpassed the Zacks Consensus Estimate by 2.1%, the bottom line missed the same by 2.9%. Martin Marietta reported lower-than-expected earnings in two of the last four quarters, with the average negative surprise being 3.9%.

The company’s fourth-quarter 2018 earnings of $1.66 per share decreased 11.7% from the year-ago level. Nevertheless, total revenues (including Products and services as well as Freight revenues) of $1,020.2 million increased 5.1% year over year.

How are Estimates Faring?

Let’s take a look at the estimate revision trend in order to get a clear picture of what analysts are thinking about the company prior to the earnings release.

For the quarter to be reported, the Zacks Consensus Estimate for earnings has declined from 34 cents to 29 cents per share over the past 30 days. Nonetheless, this indicates an increase of 81.3% from 16 cents per share reported in the year-ago quarter. Revenues are expected to be $860.9 million, up 7.3% from the year-ago reported figure of $802 million.

Martin Marietta Materials, Inc. Price and EPS Surprise

Martin Marietta Materials, Inc. Price and EPS Surprise | Martin Marietta Materials, Inc. Quote

Let’s See How Things are Shaping Up for This Announcement

Weather-related risks have been affecting Martin Marietta’s performance since the third quarter of 2018. For the to-be-reported quarter, weather woes and a slowdown in residential construction remain significant headwinds. Difficult weather conditions in geographies like the West (i.e. California) and Midwest will likely have an impact on top-line growth for aggregates producers like Martin Marietta, Summit Materials, Inc. SUM, Vulcan Materials Company VMC and Eagle Materials Inc. EXP, whose businesses are reliant on outdoor construction activity.

Apart from weather, contractor capacity issues and logistics disruptions are also pressing concerns for Martin Marietta’s margins in the to-be-reported quarter. However, moderating input cost inflation is expected to provide much support to its bottom line.

Martin Marietta’s underlying product demand and product shipments remain solid across the markets served by the company, which is a positive for the quarter to be reported. Robust construction activity, primarily in the public sector, is expected to aid Martin Marietta to generate higher revenues. Notably, the public infrastructure market contributes 39% of the company’s aggregates product line shipments volume.

Overall, the company is well positioned for the first quarter on the back of a strong pipeline of large multi-year energy projects, and improving residential, non-residential, and public construction demand trends. Notably, residential construction, which accounted for 22% of 2018 heritage aggregate shipments, should continue to grow within the company’s geographic footprint, particularly now, as the mortgage rates have been stabilizing.

Strength on acquisitions and divestitures, and attractive public sector construction demand are expected to benefit its results. Improvement in construction spending is likely to act as a tailwind to the Aggregates business.

What Our Model Indicates

Our proven model does not show that Martin Marietta is likely to beat earnings estimates in the to-be-reported quarter. 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. You can see the complete list of today’s Zacks #1 Rank stocks here.

Martin Marietta currently has a Zacks Rank #3 and an Earnings ESP of -24.14%, making surprise prediction difficult. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

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