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A Side-by-side Analysis of Martin Marietta Materials, Inc. (MLM) and Vulcan Materials Company (VMC)

Martin Marietta Materials, Inc. (NYSE:MLM) and Vulcan Materials Company (NYSE:VMC) are both Industrial Goods companies that recently hit new low. Many investors are wondering what to do with these names trading at such extreme levels. To determine if one is a better investment than the other, we will compare the two across growth, profitability, risk, return, dividends, and valuation measures.

Martin Marietta Materials, Inc. (NYSE:MLM) operates in the General Building Materials segment of the Industrial Goods sector. The company has grown sales at a 17.40% annual rate over the past five years, putting it in the high growth category. MLM has a net profit margin of 9.60% and is more profitable than the average company in the General Building Materials industry. In terms of efficiency, MLM has an asset turnover ratio of 0.53. This figure represents the amount of revenue a company generates per dollar of assets. MLM’s financial leverage ratio is 0.75, which indicates that the company’s asset base is primarily funded by equity capital. Company’s return on equity, which is really just the product of the company’s profit margin, asset turnover, and financial leverage ratios, is 9.00%, which is worse than the General Building Materials industry average ROE.

Martin Marietta Materials, Inc. (MLM) pays out an annual dividend of 1.76 per share. At the current valuation, this equates to a dividend yield of 0.85%. The company has a payout ratio of 28.30%. MLM’s current dividend therefore should be sustainable. Stock’s free cash flow yield, which represents the amount of cash available to investors before dividends, expressed as a percentage of the stock price, is 0.52. All else equal, companies with higher FCF yields are viewed as cheaper. Company trades at a P/E ratio of 30.23, and is more expensive than the average stock in the General Building Materials industry.

Over the past three months, Martin Marietta Materials, Inc. insiders have been net buyers, dumping a net of -3,368 shares. This implies that insiders have been feeling relatively bearish about the outlook for MLM. Insider activity and sentiment signals are important to monitor because they can shed light on how “risky” a stock is perceived to be at it’s current valuation. Knowing this, it makes sense to look at beta, a measure of market risk. MLM has a beta of 1.12 and therefore an above average level of market volatility.



Vulcan Materials Company (NYSE:VMC) operates in the General Building Materials segment of the Industrial Goods sector. VMC has increased sales at a 7.00% CAGR over the past five years, and is considered a medium growth stock. The company has a net profit margin of 10.80% and is more profitable than the average General Building Materials player. VMC’s asset turnover ratio is 0.41 and the company has financial leverage of 1.01. VMC’s return on equity of 8.90% is worse than the General Building Materials industry average.

Vulcan Materials Company (VMC) pays a dividend of 1.00, which translates to dividend yield of 0.82% based on the current price. Stock has a payout ratio of 30.70%. According to this ratio, VMC should be able to continue making payouts at these levels. The company trades at a free cash flow yield of 0.82 and has a P/E of 41.44. Compared to the average company in the 25.26 space, VMC is relatively expensive. The average analyst recommendation for VMC is 1.70, or a buy.

Vulcan Materials Company insiders have sold a net of -981 shares during the past three months, which implies that the company’s top executives have been feeling bearish about the stock’s outlook. Finally, VMC’s beta of 0.88 indicates that the stock has an above average level of market risk.

Martin Marietta Materials, Inc. (NYSE:MLM) scores higher than Vulcan Materials Company (NYSE:VMC) on 9 of the 13 measures compared between the two companies. MLM has the better fundamentals, scoring higher on growth, efficiency, leverage and return metrics. MLM’s dividend is more attractive.




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