Martin Marietta Materials (MLM)

Construction materials supplier Martin Marietta Materials (NYSE:MLM) fell short of the market’s revenue expectations in Q4 CY2025, with sales falling 6% year on year to $1.53 billion. The company’s full-year revenue guidance of $6.6 billion at the midpoint came in 11% below analysts’ estimates. Its GAAP profit of $4.62 per share was 7.2% below analysts’ consensus estimates.

Company Overview

Operating one of North America's largest networks of quarries, including 14 underground mines, Martin Marietta Materials (NYSE:MLM) is a natural resource-based building materials company that supplies aggregates, cement, and other construction materials for infrastructure and building projects.

Traditionally, building materials companies have built competitive advantages with economies of scale, brand recognition, and strong relationships with builders and contractors. More recently, advances to address labor availability and job site productivity have spurred innovation. Additionally, companies in the space that can produce more energy-efficient materials have opportunities to take share. However, these companies are at the whim of construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates. Additionally, the costs of raw materials can be driven by a myriad of worldwide factors and greatly influence the profitability of building materials companies.

Martin Marietta Materials' main competitors include Vulcan Materials Company (NYSE:VMC), Summit Materials (NYSE:SUM), CRH plc (NYSE:CRH), and Eagle Materials (NYSE:EXP) in the construction materials sector.

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, Martin Marietta Materials’s 6.7% annualized revenue growth over the last five years was mediocre. This fell short of our benchmark for the industrials sector and is a tough starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Martin Marietta Materials’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 1.7% annually.

This quarter, Martin Marietta Materials missed Wall Street’s estimates and reported a rather uninspiring 6% year-on-year revenue decline, generating $1.53 billion of revenue.

Looking ahead, sell-side analysts expect revenue to grow 9.6% over the next 12 months, an improvement versus the last two years. This projection is commendable and implies its newer products and services will catalyze better top-line performance.

Gross profit margin is a critical metric to track because it sheds light on its pricing power, complexity of products, and ability to procure raw materials, equipment, and labor.

Martin Marietta Materials’s gross margin is slightly below the average industrials company, giving it less room to invest in areas such as research and development. As you can see below, it averaged a 28.2% gross margin over the last five years. Said differently, Martin Marietta Materials had to pay a chunky $71.77 to its suppliers for every $100 in revenue.

This quarter, Martin Marietta Materials’s gross profit margin was 30.5%, in line with the same quarter last year. Zooming out, Martin Marietta Materials’s full-year margin has been trending up over the past 12 months, increasing by 1.1 percentage points. If this move continues, it could suggest better unit economics due to some combination of stable to improving pricing power and input costs (such as raw materials).

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

Martin Marietta Materials has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 21.1%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Analyzing the trend in its profitability, Martin Marietta Materials’s operating margin rose by 4.9 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, Martin Marietta Materials generated an operating margin profit margin of 22.2%, down 2.2 percentage points year on year. Since Martin Marietta Materials’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Martin Marietta Materials’s EPS grew at a solid 10.2% compounded annual growth rate over the last five years, higher than its 6.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Martin Marietta Materials’s earnings to better understand the drivers of its performance. As we mentioned earlier, Martin Marietta Materials’s operating margin declined this quarter but expanded by 4.9 percentage points over the last five years. Its share count also shrank by 3.2%, and these factors together are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Martin Marietta Materials, EPS didn’t budge over the last two years, a regression from its five-year trend. We hope it can revert to earnings growth in the coming years.

In Q4, Martin Marietta Materials reported EPS of $4.62, down from $4.80 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects Martin Marietta Materials’s full-year EPS of $18.81 to grow 17.3%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Martin Marietta Materials has shown robust cash profitability, enabling it to comfortably ride out cyclical downturns while investing in plenty of new offerings and returning capital to investors. The company’s free cash flow margin averaged 11.8% over the last five years, quite impressive for an industrials business.

Taking a step back, we can see that Martin Marietta Materials’s margin expanded by 1.7 percentage points during that time. This is encouraging because it gives the company more optionality.

Martin Marietta Materials’s free cash flow clocked in at $424 million in Q4, equivalent to a 27.6% margin. This cash profitability was in line with the comparable period last year and above its five-year average.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Martin Marietta Materials historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 8.6%, somewhat low compared to the best industrials companies that consistently pump out 20%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. On average, Martin Marietta Materials’s ROIC decreased by 1.7 percentage points annually each year over the last few years. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

Martin Marietta Materials reported $67 million of cash and $5.32 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $2.30 billion of EBITDA over the last 12 months, we view Martin Marietta Materials’s 2.3× net-debt-to-EBITDA ratio as safe. We also see its $58 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We struggled to find many positives in these results. Its full-year revenue guidance missed and its revenue fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 5.2% to $671.08 immediately after reporting.

Updated: February 11, 2026 at 7:12 AM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Martin Marietta Materials.

Martin Marietta Materials isn’t a terrible business, but it doesn’t pass our bar. To begin with, its revenue growth was mediocre over the last five years. And while its impressive operating margins show it has a highly efficient business model, the downside is its mediocre ROIC lags the market and is a headwind for its stock price. On top of that, its diminishing returns show management's prior bets haven't worked out.

Martin Marietta Materials’s P/E ratio based on the next 12 months is 32.2x. Beauty is in the eye of the beholder, but we don’t really see a big opportunity at the moment. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $686.54 on the company (compared to the current share price of $671.08).