| Snowflake Score | |
|---|---|
| Valuation | 3/6 |
| Future Growth | 2/6 |
| Past Performance | 2/6 |
| Financial Health | 4/6 |
| Dividends | 4/6 |
VMC Stock Overview
Vulcan Materials Company, together with its subsidiaries, produces and supplies construction aggregates primarily in the United States.
Vulcan Materials Competitors
Price History & Performance
| Historical stock prices | |
|---|---|
| Current Share Price | US$155.63 |
| 52 Week High | US$213.65 |
| 52 Week Low | US$137.54 |
| Beta | 0.79 |
| 1 Month Change | -11.01% |
| 3 Month Change | 6.73% |
| 1 Year Change | -11.60% |
| 3 Year Change | 4.42% |
| 5 Year Change | 30.13% |
| Change since IPO | 943.33% |
Recent News & Updates
A Look At The Fair Value Of Vulcan Materials Company (NYSE:VMC)
Does the September share price for Vulcan Materials Company ( NYSE:VMC ) reflect what it's really worth? Today, we will...
Returns On Capital At Vulcan Materials (NYSE:VMC) Have Hit The Brakes
If you're looking for a multi-bagger, there's a few things to keep an eye out for. Firstly, we'll want to see a proven...
Vulcan Materials Is A Hold And A Solid Pick In Building Materials
Summary Vulcan Materials' recent acquisition of U.S. Concrete solidifies a strong aggregate segment. With the high levels of expected EPS growth in 2023 and 2024, Vulcan materials also exhibit a high P/E ratio at present. Valuation and comparison against peers suggest potential risks of price declines, but even more conservative P/E expectations in 2024 suggest that investors can expect a moderate rate of return. Vulcan Materials (VMC) remains a relatively large company at $22 billion market cap with a S&P Credit rating of BBB+, providing confidence. They are larger in the south of the U.S. but remain the largest producer of aggregates (such as sand, gravel, and crushed stone) used in construction throughout the U.S. The company, at its heart, is driven by the aggregates segment (Figure 1). This is the largest segment and also shows the strongest activity and growth prospects. VMC remains relatively conservatively managed and operated and sees strong growth ahead in its core business, leading to the potential for high EPS growth in 2023 and 2024. In the rest of the article, I explain why I believe the current valuation of the company needs to be considered and why investors should be careful. Figure 1. VMC segments (TIKR Terminal) VMC has been carefully and conservatively managed. Their FFO to interest coverage is good and has been improving in recent years. The total liabilities to total assets ratio was moderately better between 2014 to 2019, but it has crept up again in the last three years. Even with the recent acquisition of U.S. Concrete, their leverage target is coming through at 2.5x. VMC's operational efficiency has also been slowly and steadily improving. While the working capital turnover has bounced around a bit, it has not been trending in an overly negative direction. Further, the overall inventory turnover has been steadily improving over the last decade. These figures suggest conservative and careful management, and as noted in the Q2 earnings call, their efforts in "driving improved efficiencies in our plans to continue offsetting the impacts of higher input costs." Their current ratio of 1.9x and quick ratio of 1.3x are good, although a little lower than the building materials industry averages of 2.1x and 1.5x, respectively, with VMC's interest coverage of 6.2x, which seems reasonable. The 2022 Q2 results have been good (Source: 2022 Q2 supplementary information for earnings call). Aggregates lifted 9% to 63.8 million tons with a cash gross profit of $7.99/ton, which is up 2%. They are seeing housing starts in the markets they serve up 7% year-on-year, with private non-residential starts in their markets up 20% year-on-year, and highway starts up 9% year-on-year in June. They have 11.4 years of weighted-average debt maturity, which is valuable in this environment. Their CAPEX remains as expected, despite their notes on the Q2 call on how "the supply chain has made it difficult to take in some of that equipment that we had planned to be delivered last year." Reasons for caution There are four points for caution to draw your attention to. First, there is a reasonable level of goodwill on the balance sheet. I am not a big fan. I make it out as about a quarter of the assets on the balance sheet. I thought that this likely relates to the earlier acquisition of U.S. Concrete in 2021, but there has been a reasonable proportion of goodwill on the balance sheet for years earlier. It is something I am wary of as I have seen this use of goodwill later transformed into impairment charges, creating a substantial, unwelcome, and often surprising blow to the earnings. Second, the EPS growth has been declining in recent years. I make the five-year estimated EPS growth at 8.6%, the three-year EPS growth at 1.5%, and the one-year EPS growth of -10.1%. This continued deceleration and then diminishing EPS levels is concerning and is likely one driver of the recent slowdown in stock prices. Part of the challenge may be because of the earlier U.S. Concrete acquisition, which may throw off some of these metrics for a while. Third, this is a difficult stock to forecast. FAST Graphs' analyst scorecard notes a 1-year forward (10% margin of error) of 23% beats, 23% hits and 54% misses. The 2-year forward (20% margin of error) is 15% beats, 23% hits, and 62% misses. So, analysts get it wrong twice as much as they get it right. Of immediate concern are the recent analyst moves and the downgrade of EPS expectations for the coming years (Figure 5, below). Peer comparison For a comparison with peers, I've selected several in the building materials industry. MDU is included as a conglomerate, with about $2,228 million of $5,680 million of their revenue from construction materials and services: CRH plc (CRH) CEMEX, S.A.B. de C.V. (CX) Eagle Materials Inc. (EXP) MDU Resources Group, Inc. (MDU) Martin Marietta Materials, Inc. (MLM) VMC is relatively expensive compared to its peers, as we can see from the following comparisons; it tends to be the highest (EV/EBITDA) or close to the highest valued firm. For comparison, for the building materials industry the EV/EBITDA is 6.8x on average, with P/E of 10.9x, price to sales of 0.6x, and price to book of 0.9x. Figure 2. EV to EBITDA comparison with peers (Finbox.io) The EV/EBITDA tends to be high, much higher than some of the other options in this industry (Figure 2). It is not outlandishly high, with MLM having a comparable value, but it is substantially (three times greater) than the most affordable firm in this comparison, CRH, and VMC holds one of the highest EV/EBITDA ratios in the industry. Figure 3. Price to Book comparison with peers (Finbox.io) The Price/Book ratio is also quite varied over the industry. Again, VMC ranks as a higher option in the industry, though not quite the highest in this comparison (Figure 3). Figure 4. Price to Sales comparison with peers (Finbox.io) The price-to-sales ratio (Figure 4) also shows relatively high multiples for VMC. As noted elsewhere, VMC expects rapid growth in the coming years and so one of the questions is whether these multiples are warranted and reasonable. Would an investor in VMC be paying for growth? Valuations Analyst price targets (Finbox.io) suggest a fair value of $198, which I think is a little optimistic. Analysts have a difficult time forecasting the earnings for the company, with the FAST Graphs scorecard showing 54% misses for one-year forecasts (with a 10% margin of error) and 62% misses for two-year forecasts (with a 20% margin of error). What can we expect from future growth? The long-term expectations for annual EPS growth are reasonable, with estimates of 19.15% (Yahoo) down to 14.7% (Factset, through FAST Graphs). Given the Factset analyst expectations of 30% in 2023 followed by 27% in 2024, this suggests that 2025 and 2026 could be very lean years. To understand the impact, I've also generated a couple of other models. VMC has limited dividend history and so the use of dividend models is limited. Therefore, I've used a P/E Multiples model, which suggests a fair value of $171.98. My 10Y DCF Revenues & Exit model suggests a fair value of $194.38. Usually, I'm fairly happy with a DCF model, but this still seems high to me. Using P/E ratios and our expectations for movements of the price back to a normalized level against the earnings, I like to use FAST Graphs to understand the likely returns. First, the company has exhibited strong growth in earnings with expectations for EPS growth of 30% in 2023 and 27% in 2024 (Figure 5). Therefore, rather than considering a 15x P/E ratio, I will switch to using P/E=G for 21.69x. As we can see below in Figure f, if we use the analyst estimates for the end of 2024 with prices maintaining this P/E ratio and earnings reaching the estimates, we expect a price of $27, 18.2% total rate of return, and 7.39% annualized rate of return. This is a conservative estimate, and as we can see, the recent prices exceed this P/E multiple. However, if we look at the analyst estimate changes (at the bottom of the chart in Figure 5), we can see that the estimates have been revised down considerably in some cases, although not as much as I see in other companies, it gives a reason to pause and consider a conservative outcome.
Shareholder Returns
| VMC | US Basic Materials | US Market | |
|---|---|---|---|
| 7D | -2.4% | -3.2% | -5.2% |
| 1Y | -11.6% | -12.0% | -23.1% |
Return vs Industry: VMC matched the US Basic Materials industry which returned -10.9% over the past year.
Return vs Market: VMC exceeded the US Market which returned -21.6% over the past year.
Price Volatility
| VMC volatility | |
|---|---|
| VMC Average Weekly Movement | 3.3% |
| Basic Materials Industry Average Movement | 4.8% |
| Market Average Movement | 6.9% |
| 10% most volatile stocks in US Market | 15.9% |
| 10% least volatile stocks in US Market | 2.8% |
Stable Share Price: VMC is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 3% a week.
Volatility Over Time: VMC's weekly volatility (3%) has been stable over the past year.
About the Company
| Founded | Employees | CEO | Website |
|---|---|---|---|
| 1909 | 11,912 | Tom Hill | https://www.vulcanmaterials.com |
Vulcan Materials Company, together with its subsidiaries, produces and supplies construction aggregates primarily in the United States. It operates through four segments: Aggregates, Asphalt, Concrete, and Calcium. The Aggregates segment provides crushed stones, sand and gravel, sand, and other aggregates; and related products and services that are applied in construction and maintenance of highways, streets, and other public works, as well as in the construction of housing and commercial, industrial, and other nonresidential facilities.
Vulcan Materials Fundamentals Summary
| VMC fundamental statistics | |
|---|---|
| Market Cap | US$20.68b |
| Earnings (TTM) | US$609.70m |
| Revenue (TTM) | US$6.62b |
33.9x
P/E Ratio3.1x
P/S RatioIs VMC overvalued?
See Fair Value and valuation analysisEarnings & Revenue
| VMC income statement (TTM) | |
|---|---|
| Revenue | US$6.62b |
| Cost of Revenue | US$5.16b |
| Gross Profit | US$1.46b |
| Other Expenses | US$851.00m |
| Earnings | US$609.70m |
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
n/a
| Earnings per share (EPS) | 4.59 |
| Gross Margin | 22.07% |
| Net Profit Margin | 9.21% |
| Debt/Equity Ratio | 60.1% |
How did VMC perform over the long term?
See historical performance and comparisonDividends
1.0%
Current Dividend Yield34%
Payout RatioValuation
Is VMC undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score
3/6Valuation Score 3/6
Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast
Key Valuation Metric
Which metric is best to use when looking at relative valuation for VMC?
Other financial metrics that can be useful for relative valuation.
| What is VMC's n/a Ratio? | |
|---|---|
| n/a Ratio | 0x |
| n/a | n/a |
| Market Cap | US$20.68b |
| Key Statistics | |
|---|---|
| Enterprise Value/Revenue | 3.8x |
| Enterprise Value/EBITDA | 16.8x |
| PEG Ratio | 2x |
Price to Earnings Ratio vs Peers
How does VMC's PE Ratio compare to its peers?
| VMC PE Ratio vs Peers |
|---|
| Company | PE | Estimated Growth | Market Cap |
|---|---|---|---|
| Peer Average | 14.2x | ||
MLM Martin Marietta Materials | 25.3x | 12.3% | US$20.0b |
EXP Eagle Materials | 10.4x | 4.5% | US$4.0b |
SUM Summit Materials | 10.8x | -1.6% | US$3.0b |
LOMA Loma Negra Compañía Industrial Argentina Sociedad Anónima | 10.3x | 35.4% | US$713.0m |
VMC Vulcan Materials | 33.9x | 16.7% | US$20.7b |
Price-To-Earnings vs Peers: VMC is expensive based on its Price-To-Earnings Ratio (33.9x) compared to the peer average (14.2x).
Price to Earnings Ratio vs Industry
How does VMC's PE Ratio compare vs other companies in the Global Basic Materials Industry?
Price-To-Earnings vs Industry: VMC is expensive based on its Price-To-Earnings Ratio (33.9x) compared to the Global Basic Materials industry average (13.8x)
Price to Earnings Ratio vs Fair Ratio
What is VMC's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
| Fair Ratio | |
|---|---|
| Current PE Ratio | 33.9x |
| Fair PE Ratio | 23.5x |
Price-To-Earnings vs Fair Ratio: VMC is expensive based on its Price-To-Earnings Ratio (33.9x) compared to the estimated Fair Price-To-Earnings Ratio (23.5x).
Share Price vs Fair Value
What is the Fair Price of VMC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: VMC ($155.63) is trading below our estimate of fair value ($216.59)
Significantly Below Fair Value: VMC is trading below fair value by more than 20%.
Analyst Price Targets
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.
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Future Growth
How is Vulcan Materials forecast to perform in the next 1 to 3 years based on estimates from 18 analysts?
Future Growth Score
2/6Future Growth Score 2/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE
16.7%
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: VMC's forecast earnings growth (16.7% per year) is above the savings rate (1.9%).
Earnings vs Market: VMC's earnings (16.7% per year) are forecast to grow faster than the US market (14.7% per year).
High Growth Earnings: VMC's earnings are forecast to grow, but not significantly.
Revenue vs Market: VMC's revenue (7% per year) is forecast to grow slower than the US market (7.6% per year).
High Growth Revenue: VMC's revenue (7% per year) is forecast to grow slower than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: VMC's Return on Equity is forecast to be low in 3 years time (12.6%).
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Past Performance
How has Vulcan Materials performed over the past 5 years?
Past Performance Score
2/6Past Performance Score 2/6
Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE
5.0%
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: VMC has high quality earnings.
Growing Profit Margin: VMC's current net profit margins (9.2%) are lower than last year (13.7%).
Past Earnings Growth Analysis
Earnings Trend: VMC's earnings have grown by 5% per year over the past 5 years.
Accelerating Growth: VMC's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.
Earnings vs Industry: VMC had negative earnings growth (-9.7%) over the past year, making it difficult to compare to the Basic Materials industry average (-3.2%).
Return on Equity
High ROE: VMC's Return on Equity (9%) is considered low.
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Financial Health
How is Vulcan Materials's financial position?
Financial Health Score
4/6Financial Health Score 4/6
Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage
Financial Position Analysis
Short Term Liabilities: VMC's short term assets ($1.9B) exceed its short term liabilities ($1.0B).
Long Term Liabilities: VMC's short term assets ($1.9B) do not cover its long term liabilities ($6.4B).
Debt to Equity History and Analysis
Debt Level: VMC's net debt to equity ratio (58.3%) is considered high.
Reducing Debt: VMC's debt to equity ratio has reduced from 72.3% to 60.1% over the past 5 years.
Debt Coverage: VMC's debt is well covered by operating cash flow (23.2%).
Interest Coverage: VMC's interest payments on its debt are well covered by EBIT (6.6x coverage).
Balance Sheet
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Dividend
What is Vulcan Materials's current dividend yield, its reliability and sustainability?
Dividend Score
4/6Dividend Score 4/6
Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage
1.03%
Current Dividend Yield
Dividend Yield vs Market
Notable Dividend: VMC's dividend (1.03%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.62%).
High Dividend: VMC's dividend (1.03%) is low compared to the top 25% of dividend payers in the US market (4.45%).
Stability and Growth of Payments
Stable Dividend: VMC's dividends per share have been stable in the past 10 years.
Growing Dividend: VMC's dividend payments have increased over the past 10 years.
Earnings Payout to Shareholders
Earnings Coverage: With its reasonably low payout ratio (33.6%), VMC's dividend payments are well covered by earnings.
Cash Payout to Shareholders
Cash Flow Coverage: With its reasonable cash payout ratio (54.6%), VMC's dividend payments are covered by cash flows.
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Management
How experienced are the management team and are they aligned to shareholders interests?
3.1yrs
Average management tenure
CEO
Tom Hill (63 yo)
8.17yrs
Tenure
US$10,420,114
Compensation
Mr. James Thomas Hill, also known as Tom, serves as an Independent Director at Regions Financial Corporation since July 1, 2022. He has been the Chief Executive Officer and President at Vulcan Materials Co...
CEO Compensation Analysis
Compensation vs Market: Tom's total compensation ($USD10.42M) is about average for companies of similar size in the US market ($USD13.05M).
Compensation vs Earnings: Tom's compensation has been consistent with company performance over the past year.
Leadership Team
Experienced Management: VMC's management team is considered experienced (3.1 years average tenure).
Board Members
Experienced Board: VMC's board of directors are considered experienced (7.9 years average tenure).
Ownership
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.
Recent Insider Transactions
| Date | Value | Name | Entity | Role | Shares | Max Price |
|---|---|---|---|---|---|---|
| 07 Jun 22 | SellUS$430,757 | David Clement | Individual | 2,607 | US$165.23 | |
| 23 Nov 21 | SellUS$1,096,950 | David Clement | Individual | 5,542.04 | US$198.16 | |
| 23 Nov 21 | SellUS$598,084 | Jerry Perkins | Individual | 3,016 | US$199.04 |
Ownership Breakdown
Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.
Top Shareholders
| Ownership | Name | Shares | Current Value | Change % | Portfolio % | |
|---|---|---|---|---|---|---|
| 14,696,646 | $2.3b | 1.11% | 0.05% | |||
| 10,897,176 | $1.7b | -0.49% | 0.04% | |||
| 9,953,700 | $1.5b | 0% | 1.81% | |||
| 8,771,928 | $1.4b | 5.78% | 0.36% | |||
| 5,485,741 | $853.7m | -2.62% | 0.05% | |||
| 4,527,221 | $704.6m | 1.26% | 0.49% | |||
| 2,802,416 | $436.1m | 41.91% | 0.08% | |||
| 2,725,282 | $424.1m | 13.38% | 0.39% | |||
| 2,685,014 | $417.9m | 2.59% | 0.05% | |||
| 2,508,587 | $390.4m | -1.31% | 0.08% | |||
| 2,481,334 | $386.2m | 4.3% | 0.05% | |||
| 2,226,435 | $346.5m | 14.06% | 1.24% | |||
| 2,093,549 | $325.8m | 3.05% | 0.11% | |||
| 2,015,636 | $313.7m | 14.98% | 8.65% | |||
| 2,013,848 | $313.4m | 222.44% | 0.48% | |||
| 1,834,733 | $285.5m | -0.66% | 0.62% | |||
| 1,446,894 | $225.2m | -5.64% | 1.4% | |||
| 1,212,166 | $188.6m | 0% | 0.03% | |||
| 1,201,646 | $187.0m | 20.17% | 0.5% | |||
| 1,167,985 | $181.8m | -0.29% | 0.05% | |||
| 1,159,113 | $180.4m | -1.28% | 1.14% | |||
| 1,135,337 | $176.7m | -17.92% | 0.17% | |||
| 1,123,652 | $174.9m | 8.73% | 0.07% | |||
| 1,064,955 | $165.7m | -1.52% | 2.44% | |||
| 1,036,264 | $161.3m | 6.28% | 0.04% |
Company Information
Vulcan Materials Company's employee growth, exchange listings and data sources
Key Information
- Name: Vulcan Materials Company
- Ticker: VMC
- Exchange: NYSE
- Founded: 1909
- Industry: Construction Materials
- Sector: Materials
- Implied Market Cap: US$20.683b
- Shares outstanding: 132.90m
- Website: https://www.vulcanmaterials.com
Number of Employees
Location
- Vulcan Materials Company
- 1200 Urban Center Drive
- Birmingham
- Alabama
- 35242-5014
- United States
Listings
| Ticker | Exchange | Primary Security | Security Type | Country | Currency | Listed on |
|---|---|---|---|---|---|---|
| VMC | NYSE (New York Stock Exchange) | Yes | Common Stock | US | USD | Jan 1968 |
| VMC | DB (Deutsche Boerse AG) | Yes | Common Stock | DE | EUR | Jan 1968 |
| VMC * | BMV (Bolsa Mexicana de Valores) | Yes | Common Stock | MX | MXN | Jan 1968 |
| 0LRK | LSE (London Stock Exchange) | Yes | Common Stock | GB | USD | Jan 1968 |
| V1MC34 | BOVESPA (Bolsa de Valores de Sao Paulo) | BDR EACH 4 REPR 1 COM | BR | BRL | Jan 2020 |
Company Analysis and Financial Data Status
| Data | Last Updated (UTC time) |
|---|---|
| Company Analysis | 2022/09/24 00:00 |
| End of Day Share Price | 2022/09/23 00:00 |
| Earnings | 2022/06/30 |
| Annual Earnings | 2021/12/31 |
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.