Martin Marietta rocks along, missing earnings estimate

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Martin Marietta Materials Inc., the Raleigh-based company that is a national leader in selling stone, sand, gravel and cement for highways and other construction-industry sectors, reported earnings Tuesday that were less than expected by analysts. But shares shot up more than 10% in early trading as investors looked past the quarterly report.

Sales of $781 million in the fourth quarter were about $45 million less than expected, while earnings per share was $1.26, compared with a consensus of $1.32. For the year, earnings per share gained 58% to $4.29.

The report continues a history of surprises at Martin Marietta, which has long seemed poised for success given the obvious need for better roads, bridges and other infrastructure in the U.S. After its $3 billion acquisition of Texas Industries in 2014, cement now makes up about 8% of sales. The deal put the company in the middle of one of the fastest-growing states. Almost two years later, Texas isn’t looking as rosy given the oil-price collapse and subsequent overall economic slowdown.

Martin Marietta has also been long favored by analysts, who collectively predict the company’s earnings per share will increase by 15.5% over the next five years, or triple the expected growth of the S&P 500, according to Yahoo! Finance. Ten of the 15 analysts tracking the company rate it a “buy,” with an average price target of about $172 — about 45% higher than Monday’s level, before the earnings were announced.

The company has also won plaudits for its operations, safety record and in 2014 it was included in the S&P 500. CEO Ward Nye has appeared on Jim Cramer’s CNBC show.

But the U.S. infrastructure crisis story hasn’t panned out for Martin Marietta shareholders over the past decade. Company shares soared during the first decade after defense contractor Martin Marietta spun off the aggregates company in 1996.

Since 2006, the shares have trailed the S&P 500 over the last five and 10-year periods, even as the company’s sales have exploded to more than $3.3 billion. Since Nye succeeded Steve Zelnak as CEO in 2010, shares have gained about 30%, or about half as much as the S&P increased in that period.

Lots of roads and bridges still need to be improved and expanded — ask any drive-time commuter in most major cities. And the Lone Star state will recover as oil prices inevitably rebound. For Martin Marietta shareholders, it can’t happen fast enough. Tuesday may be the start.

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