Is Now An Opportune Moment To Examine Martin Marietta Materials, Inc. (NYSE:MLM)?

Martin Marietta Materials, Inc. (NYSE:MLM) received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$613 at one point, and dropping to the lows of US$530. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Martin Marietta Materials' current trading price of US$566 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Martin Marietta Materials’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Martin Marietta Materials

What Is Martin Marietta Materials Worth?

According to our valuation model, Martin Marietta Materials seems to be fairly priced at around 15% below our intrinsic value, which means if you buy Martin Marietta Materials today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $661.59, then there’s not much of an upside to gain from mispricing. What's more, Martin Marietta Materials’s share price may be more stable over time (relative to the market), as indicated by its low beta.

Can we expect growth from Martin Marietta Materials?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Martin Marietta Materials, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? Currently, MLM appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on MLM for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on MLM should the price fluctuate below its true value.

So while earnings quality is important, it's equally important to consider the risks facing Martin Marietta Materials at this point in time. When we did our research, we found 2 warning signs for Martin Marietta Materials (1 is a bit concerning!) that we believe deserve your full attention.

If you are no longer interested in Martin Marietta Materials, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com