Martin Marietta (MLM) to Post Q4 Earnings: Key Factors to Note
Martin Marietta Materials, Inc. MLM is scheduled to report fourth-quarter 2023 results on Feb 14, before the opening bell.
In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 17%, but revenues missed the same by 0.5%. On a year-over-year basis, earnings of this aggregates producer increased 48%, and revenues rose 10.1%.
Martin Marietta’s earnings topped the consensus mark in the last four quarters, the average surprise being 37.3%.
The Trend in Estimate Revision
The Zacks Consensus Estimate for Martin Marietta’s fourth-quarter earnings is pegged at $3.96 per share, which moved down a cent from $3.97 in the past seven days. This suggests a rise of 30.3% from the year-ago quarter’s reported figure of $3.04.
Martin Marietta Materials, Inc. Price and EPS Surprise
Martin Marietta Materials, Inc. price-eps-surprise | Martin Marietta Materials, Inc. Quote
The consensus estimate for net sales is pegged at $1.64 billion, indicating a 19.2% increase from the prior-year quarter’s figure of $1.38 billion.
Factors to Note
Martin Marietta’s fourth-quarter revenues are expected to have improved on the back of strong pricing gains in aggregates, strength in public construction and accretive acquisitions. The company expects solid near-term product demand reinforced by healthy customer backlogs across its coast-to-coast footprint, led by infrastructure and heavy non-residential projects of scale.
MLM’s business has been sensitive to changes in construction spending, particularly housing and public construction in Texas, Colorado, North Carolina, Georgia, Florida, and Iowa. Infrastructure construction, particularly for aggregates-intensive highways, roads and streets, might have also contributed to its performance in the quarter, as contractors advanced projects that have been awarded and funded. The company predicts a significant increase in aggregate demand in the U.S. economy to boost revenues.
Our model suggests Aggregates pricing to increase to $20.29 per ton, marking 15.4% year-over-year growth. We expect Aggregates revenues to increase 10.3% year over year to $924.8 million. However, we expect Aggregates volume to be 45.6 million tons versus 47.7 million reported a year ago.
We expect cement revenues to increase 29.2% year over year to $178.7 million. Cement pricing is also anticipated to rise 58.7% to $236.81 per ton. The same for Cement volume is pegged at 1 million tons, up 11.5% from a year ago.
We expect the Building Material segment revenues, which comprised 96.2% of total revenues in the third quarter of 2023, to grow 11.7% year over year to $1.57 billion. Our expectation for gross profit for the Building Material unit is pegged at $437.8 million versus $331.4 million reported a year ago.
Our model suggests Magnesia Specialties revenues are likely to increase 0.3% year over year to $69.8 million. We project gross profit for the Magnesia Specialties unit at $21 million versus $20 million reported a year ago.
However, inflation, higher liquid asphalt and diesel fuel costs, a rise in transportation and insurance costs, as well as labor costs, may have put pressure on the bottom line in the fourth quarter. Also, expenses related to higher repair and maintenance, supply and contract as well as supply-chain bottlenecks are added concerns.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Martin Marietta this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.
Currently, MLM has an Earnings ESP of -3.66% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Here are some other companies in the Zacks Construction sector that, according to our model, have the right combination of elements to post an earnings beat in the quarter to be reported.
Owens Corning OC has an Earnings ESP of +1.95% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
OC’s earnings for the to-be-reported quarter are expected to increase 13.3%. The company reported better-than-expected earnings in all the last four quarters, the average surprise being 17.5%.
Louisiana-Pacific Corporation LPX has an Earnings ESP of +8.24% and a Zacks Rank #3.
LPX’s earnings for the to-be-reported quarter are expected to decline 14.8%. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 98.3%.
JELD-WEN Holding, Inc. JELD has an Earnings ESP of +10.90% and has a Zacks Rank #3.
JELD’s earnings topped the consensus mark in each of the last four quarters, with the average being 126.5%. Earnings for the to-be-reported quarter are expected to decline 46.8% year over year.
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Louisiana-Pacific Corporation (LPX) : Free Stock Analysis Report
Martin Marietta Materials, Inc. (MLM) : Free Stock Analysis Report
Owens Corning Inc (OC) : Free Stock Analysis Report
JELD-WEN Holding, Inc. (JELD) : Free Stock Analysis Report
