TheStreet Ratings Top 10 Rating Changes

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Rating Change #7

Martin Marietta Materials (MLM) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

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Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 34.2%. Since the same quarter one year prior, revenues rose by 18.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Construction Materials industry. The net income increased by 28.0% when compared to the same quarter one year prior, rising from $49.16 million to $62.92 million.
  • MLM's debt-to-equity ratio of 0.77 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that MLM's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.53 is high and demonstrates strong liquidity.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • MARTIN MARIETTA MATERIALS has improved earnings per share by 27.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MARTIN MARIETTA MATERIALS reported lower earnings of $1.74 versus $2.09 in the prior year. This year, the market expects an improvement in earnings ($2.35 versus $1.74).
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Martin Marietta Materials, Inc., together with its subsidiaries, engages in the production and sale of aggregates for the construction industry primarily in the United States, Canada, the Bahamas, and the Caribbean Islands. The company has a P/E ratio of 58.1, above the S&P 500 P/E ratio of 17.7. Martin Marietta has a market cap of $4.13 billion and is part of the industrial goods sector and materials & construction industry. Shares are up 19.9% year to date as of the close of trading on Tuesday.