Infrastructure And Data Center Demand Will Support Long Term Construction Materials Upside

Catalysts

About Titan America

Titan America is a vertically integrated producer of cement, aggregates, ready mixed concrete and related building materials serving high growth markets along the Eastern Seaboard.

What are the underlying business or industry changes driving this perspective?

• Continued public and private investment in infrastructure modernization across Florida and the Mid Atlantic, including highways, bridges, airports and large environmental projects like the Everglades Reservoir, is expected to sustain healthy aggregates and cement demand, supporting durable revenue growth and higher asset utilization.
• Structural growth in data center and advanced manufacturing construction in Virginia and the broader Mid Atlantic, where Titan America already supplies major hyperscale campuses, should drive mix toward higher value technical solutions and support pricing power, benefiting net margins and earnings quality.
• Population growth and business migration into Sun Belt markets such as Florida, combined with an eventual recovery in single family housing from 2026 onward, should broaden demand across residential and nonresidential channels, improving volume leverage and expanding operating margins.
• Expanding vertical integration through new precast lintel capacity and complementary downstream products is expected to deepen customer relationships, pull through additional upstream cement and aggregates volumes, and enhance overall margin profile and earnings resilience.
• Ongoing investments in low carbon, high performance cement and digital capabilities should differentiate Titan America with infrastructure and institutional customers, enabling premium pricing and share gains that support long term revenue growth and incremental margin expansion.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Titan America's revenue will grow by 6.6% annually over the next 3 years.
• Analysts assume that profit margins will increase from 10.8% today to 13.8% in 3 years time.
• Analysts expect earnings to reach $275.8 million (and earnings per share of $1.52) by about December 2028, up from $178.5 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 14.1x on those 2028 earnings, down from 18.0x today. This future PE is lower than the current PE for the US Basic Materials industry at 26.7x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.66%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Secular growth in infrastructure, data centers and advanced manufacturing across Florida and the Mid Atlantic, combined with Titan America's strong order book and price increases from January 2026, could drive sustained volume and pricing gains that lift revenue and earnings above current expectations. This could support a higher share price and contradict the assumption that it will remain flat, with the upside primarily flowing through revenue growth and net margins.
• The planned step change in aggregates capacity and reserves at Pennsuco, along with the 125 million ton reserve expansion project expected to influence results around 2027, may further improve asset utilization and operating leverage. This could create structurally higher profitability that boosts long term earnings and potentially re-rates the valuation multiple upward rather than keeping the share price unchanged.
• Entry into the precast lintel market, with the first state of the art plant targeted for late 2026 or early 2027 and a strategy to scale quickly through existing customer channels, could generate a new, higher margin revenue stream and pull through additional upstream cement and aggregates volumes. This may accelerate earnings growth and expand net margins in a way that supports share price appreciation.
• Ongoing investments in high performance, low carbon cement and digital capabilities, alongside early adoption of green products like 1P cement in downstream applications, may differentiate Titan America in sustainable infrastructure and high specification projects. This could enable premium pricing and mix upgrade that raise long term revenue quality, net margins and earnings, challenging the expectation of a flat share price.
• A strong balance sheet with low net leverage at 0.71 times EBITDA and significant free cash flow generation, coupled with continued capital returns via share premium distributions and potential value accretive M&A, could support higher investor confidence and multiple expansion. This may lead to a structurally higher valuation level and upward pressure on the share price through both earnings and net margin resilience.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of $16.43 for Titan America based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $18.0, and the most bearish reporting a price target of just $14.0.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be $2.0 billion, earnings will come to $275.8 million, and it would be trading on a PE ratio of 14.1x, assuming you use a discount rate of 8.7%.
  
• Given the current share price of $16.62, the analyst price target of $16.43 is 1.2% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.