Valued at a market cap of $36.1 billion, Vulcan Materials Company (VMC) produces, distributes and sells construction aggregates and other construction materials. The Birmingham, Alabama-based company offers materials such as crushed stone, sand, gravel, riprap, jetty stone, and other aggregates used in the construction and maintenance of infrastructure, including roads, buildings, and public works.
Shares of this construction company have lagged behind the broader market over the past 52 weeks. VMC has gained 3.2% over this time frame, while the broader S&P 500 Index ($SPX) has soared 9.8%. However, on a YTD basis, the stock is up 5.2%, outpacing SPX’s marginal drop.
Narrowing the focus, VMC has also underperformed the Invesco Building & Construction ETF’s (PKB) 7.4% uptick over the past 52 weeks. Nonetheless, it has outperformed the ETF’s 2.3% return on a YTD basis.
On Apr. 30, shares of VMC surged 6.9% after its mixed Q1 earnings release. The company’s revenue grew 5.8% year-over-year to $1.6 billion but missed the consensus estimates by 3%. A decrease in the aggregate segment's shipments compared to the year-ago quarter might have led to its top-line miss. Nonetheless, strong operational discipline led to notable earnings growth and margin improvement, with its adjusted EBITDA margin expanding by 420 basis points year-over-year. Additionally, its adjusted EPS rose 25% from the prior-year quarter to $1, exceeding analyst expectations by a significant 26.6%.
Looking ahead, noting the strong Q1 earnings growth, VMC reaffirmed its fiscal 2025 adjusted EBITDA outlook to be between $2.4 billion and $2.6 billion.
For the current fiscal year, ending in December, analysts expect VMC’s EPS to grow 14.6% year over year to $8.63. The company’s earnings surprise history is mixed. It topped the consensus estimates in two of the last four quarters, while missing on two other occasions.
Among the 22 analysts covering the stock, the consensus rating is a “Strong Buy” which is based on 17 “Strong Buy,” one “Moderate Buy,” and four “Hold” ratings.
This configuration is more bullish than a month ago, with 15 analysts suggesting a “Strong Buy” rating.
On May 16, UBS Group AG (UBS) analyst Steven Fisher upgraded VMC’s rating to “Buy” and raised its price target to $318, which indicates a 17.5% potential upside from the current levels.
The mean price target of $300.10 represents a 10.9% premium from VMC’s current price levels, while the Street-high price target of $320 suggests an upside potential of 18.3%.
