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Is a Beat in Store for Martin Marietta (MLM) in Q4 Earnings?

Zacks

Martin Marietta Materials, Inc. MLM is set to report fourth-quarter 2017 results on Feb 13, before markets open. Last quarter, the company’s earnings missed the Zacks Consensus Estimate by 4.02%.

Martin Marietta has a dismal history, at least in terms of bottom-line performance. The company surpassed expectations in only two of the last 10 quarters. Well the obvious question that comes to mind is whether Martin Marietta will be able to beat earnings in the fourth quarter of 2017. Let us delve into the factors that are likely to affect Q4 results.

Factors at Play

Adverse weather conditions in many markets might mar Martin Marietta’s results in the to-be-reported quarter. Weather-related risks have been negatively impacting the company’s performance due to the exterior nature of the business despite improving economic conditions, cost management and enhanced operational efficiency. The first and fourth quarters are most affected by winter. Hurricanes in the Atlantic Ocean and Gulf Coast are most active during these quarters. Also, Martin Marietta has been grappling with weak volumes since 2016 due to labor constraints and delays in large projects.

Nonetheless, the company is well positioned on its solid exposure in states like Texas, Colorado, Georgia, Florida, North Carolina in the South East and the West. Also, state/local municipal level initiatives to finance infrastructure projects should drive construction of highways, streets, roads, and bridges, thereby boosting aggregates demand. The aggregates product line infrastructure shipments are expected to increase in the mid-single digits in 2017.

The company’s string of acquisitions, divestitures and an uptick in private construction activity are encouraging. Sustained growth in construction activity drives demand for aggregates and cement businesses of the company. This can be expected to benefit results in the to-be-reported quarter.

Overall, for the fourth quarter, the current Zacks Consensus Estimate is $1.45, reflecting a year-over-year decline of 6.5%. Analysts polled by Zacks expect revenues of $917.5 million, up 3.2% from the year-ago quarter.

What the Zacks Model Unveils

Our proven model shows that Martin Marietta is likely to beat estimates this quarter as the stock has the right combination of two key ingredients — a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen.

Martin Marietta has an Earnings ESP of +6.23% and a Zacks Rank #3. This makes us reasonably confident of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Martin Marietta Materials, Inc. Price and EPS Surprise

Other Stocks With Favorable Combination

Here are some other companies in the construction sector you may want to consider as our model shows that these also have the right combination of elements to post an earnings beat:

Boise Cascade Company BCC has an Earnings ESP of +15.79% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Century Communities, Inc. CCS has an Earnings ESP of +7.32% and a Zacks Rank #1.

MasTec, Inc. MTZ has an Earnings ESP of +3.10% and a Zacks Rank #2.

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