Is Now The Time To Put Martin Marietta Materials (NYSE:MLM) On Your Watchlist?

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

In contrast to all that, many investors prefer to focus on companies like Martin Marietta Materials (NYSE:MLM), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Martin Marietta Materials with the means to add long-term value to shareholders.

Check out our latest analysis for Martin Marietta Materials

How Fast Is Martin Marietta Materials Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. Martin Marietta Materials' shareholders have have plenty to be happy about as their annual EPS growth for the last 3 years was 40%. While that sort of growth rate isn't sustainable for long, it certainly catches the eye of prospective investors.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. Martin Marietta Materials shareholders can take confidence from the fact that EBIT margins are up from 21% to 23%, and revenue is growing. Both of which are great metrics to check off for potential growth.

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

Fortunately, we've got access to analyst forecasts of Martin Marietta Materials' future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Martin Marietta Materials Insiders Aligned With All Shareholders?

Owing to the size of Martin Marietta Materials, we wouldn't expect insiders to hold a significant proportion of the company. But we are reassured by the fact they have invested in the company. We note that their impressive stake in the company is worth US$219m. We note that this amounts to 0.6% of the company, which may be small owing to the sheer size of Martin Marietta Materials but it's still worth mentioning. This still shows shareholders there is a degree of alignment between management and themselves.

Should You Add Martin Marietta Materials To Your Watchlist?

Martin Marietta Materials' earnings per share have been soaring, with growth rates sky high. That sort of growth is nothing short of eye-catching, and the large investment held by insiders should certainly brighten the view of the company. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. Based on the sum of its parts, we definitely think its worth watching Martin Marietta Materials very closely. We don't want to rain on the parade too much, but we did also find 3 warning signs for Martin Marietta Materials (1 is a bit unpleasant!) that you need to be mindful of.

Although Martin Marietta Materials certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of companies that not only boast of strong growth but have strong insider backing.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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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.