Unveiling the Investment Potential of Vulcan Materials Co (VMC): A Comprehensive Analysis
Vulcan Materials Co (NYSE:VMC) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $212.55, Vulcan Materials Co has witnessed a daily gain of 2.71%, marked against a three-month change of -3.43%. A thorough analysis, underlined by the GF Score, suggests that Vulcan Materials Co is well-positioned for substantial growth in the near future.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Here are the key components of Vulcan Materials Co's GF Score:
Financial strength rank: 6/10
Profitability rank: 9/10
Growth rank: 10/10
GF Value rank: 6/10
Momentum rank: 6/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With a high profitability rank and an impressive growth rank, GuruFocus assigned Vulcan Materials Co the GF Score of 93 out of 100, which signals the highest outperformance potential.
Understanding Vulcan Materials Co's Business
Vulcan Materials Co, with a market cap of $28.24 billion, is the United States' largest producer of construction aggregates (crushed stone, sand, and gravel). Its largest markets include Texas, California, Virginia, Tennessee, Georgia, Florida, North Carolina, and Alabama. In 2022, Vulcan sold 263.4 million tons of aggregates, 12.2 million tons of asphalt mix, and 10.5 million cubic yards of ready-mix. As of Dec. 31, 2022, the company had nearly 16 billion tons of aggregates reserves. The company's sales stand at $7.58 billion with an operating margin of 15.54%.
Financial Strength Breakdown
According to the Financial Strength rating, Vulcan Materials Co's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Vulcan Materials Co stands impressively at 6.2, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With a favorable Debt-to-Revenue ratio of 0.58, Vulcan Materials Co's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Vulcan Materials Co's impressive standing among its peers in generating profit. Vulcan Materials Co's strong Predictability Rank of 4.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Vulcan Materials Co demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 14%, which outperforms better than 77.4% of 354 companies in the Building Materials industry. Moreover, Vulcan Materials Co has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 6.9, and the rate over the past five years is 9.9. This trend accentuates the company's continued capability to drive growth.
Conclusion
Given Vulcan Materials Co's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. This analysis underscores the company's robust financial health, consistent profitability, and impressive growth trajectory, making it a compelling investment opportunity. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
