Martin Marietta (MLM) Q3 Earnings to Aid From Demand & Pricing
Martin Marietta Materials, Inc. MLM is scheduled to report third-quarter 2023 results on Nov 1, before the opening bell.
In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 15.9%, but revenues missed the same by 0.3%. On a year-over-year basis, earnings of this aggregates producer increased by 41.4% and revenues rose by 10.9%.
Martin Marietta’s earnings topped the consensus mark in three of the last four quarters and missed on one occasion, the average surprise being 33.4%.
The Trend in Estimate Revision
The Zacks Consensus Estimate for Martin Marietta’s third-quarter earnings is pegged at $5.99 per share, suggesting a rise of 27.7% from the year-ago quarter’s reported figure of $4.69.
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 $2 billion, indicating a 19.1% increase from the prior-year quarter’s reported figure of $1.68 billion.
Factors to Note
Martin Marietta’s third-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, as well as 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 boost in aggregate demand in the U.S. economy to boost revenues.
Our model suggests Aggregates pricing to increase to $18.18 per ton, marking 9.2% year-over-year growth. We expect Aggregates revenues to increase 4.2% year over year to $1,058.7 million. We also expect Aggregates volume to be 58.2 million tons versus 60.2 million reported a year ago.
We expect cement revenues to increase 52.4% year over year to $248.7 million. Cement pricing is also anticipated to rise 58.7% to $236.81 per ton. The same for Cement volume is pegged at 1.1 million tons, down 4.5% from a year ago.
We expect the Building Material segment revenues, which comprised 95.6% of total revenues in the second quarter, to grow 9.2% year over year to $1,895.6 million.
The Zacks Consensus Estimates for gross profit for the Building Material unit is pegged at $609 million versus $469.3 million reported a year ago.
Our model suggests Magnesia Specialties revenues are likely to increase 28.1% year over year to $97 million.
The Zacks Consensus Estimates for gross profit for the Magnesia Specialties unit is pegged at $26.53 million versus $20.6 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 third 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 doesn’t 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 a Zacks Rank #2 and an Earnings ESP of -3.17%. 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.
KBR, Inc. KBR has an Earnings ESP of +6.36% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
KBR’s earnings for the to-be-reported quarter are expected to increase by 12.3%. The company reported better-than-expected earnings in all the last four quarters, the average surprise being 10.8%.
Dycom Industries, Inc. DY has an Earnings ESP of +1.24% and a Zacks Rank #2.
DY’s earnings for the to-be-reported quarter are expected to grow by 43.9%. The company reported better-than-expected earnings in all the last four quarters, the average surprise being 147.4%.
Construction Partners, Inc. ROAD has an Earnings ESP of +2.91% and sports a Zacks Rank #1.
ROAD’s earnings topped the consensus mark in three of the last four quarters, with the average being 10.6%. Earnings for the to-be-reported quarter are expected to rise 108% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
KBR, Inc. (KBR) : Free Stock Analysis Report
Martin Marietta Materials, Inc. (MLM) : Free Stock Analysis Report
Dycom Industries, Inc. (DY) : Free Stock Analysis Report
Construction Partners, Inc. (ROAD) : Free Stock Analysis Report
