Update (9:41 a.m.): Updated with Tuesday market open information.
NEW YORK (TheStreet) -- Stifel Nicolaus upgraded Martin Marietta (MLM) to "buy" from "hold" and set a target price of $125. The firm cited numerous growth headwinds behind the company as reason for the upgrade.
The stock was moving up 1.95% to $104.78 in early morning trading on Tuesday.
"We rate MARTIN MARIETTA MATERIALS (MLM) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, increase in net income and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
Separately, TheStreet Ratings team rates MARTIN MARIETTA MATERIALS as a "buy" with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
- The revenue growth came in higher than the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 12.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.77, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, MLM has a quick ratio of 1.71, which demonstrates the ability of the company to cover short-term liquidity needs.
- MARTIN MARIETTA MATERIALS has improved earnings per share by 13.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, MARTIN MARIETTA MATERIALS increased its bottom line by earning $1.83 versus $1.69 in the prior year. This year, the market expects an improvement in earnings ($2.56 versus $1.83).
- The net income growth from the same quarter one year ago has significantly exceeded that of the Construction Materials industry average, but is less than that of the S&P 500. The net income increased by 14.2% when compared to the same quarter one year prior, going from $62.92 million to $71.84 million.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- You can view the full analysis from the report here: MLM Ratings Report
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