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Should You Think About Buying Martin Marietta Materials, Inc. (NYSE:MLM) Now?

editorial-team@simplywallst.com (Simply Wall St)
·3-min read

Let's talk about the popular Martin Marietta Materials, Inc. (NYSE:MLM). The company's shares received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$622 at one point, and dropping to the lows of US$546. 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$559 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.

View 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 9.6% 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 that the stock is really worth $617.81, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, Martin Marietta Materials has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of Martin Marietta Materials look like?

earnings-and-revenue-growth
earnings-and-revenue-growth

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Martin Marietta Materials, at least in the near future.

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 reduce the risk in 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.

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Are you a potential investor? If you’ve been keeping tabs on MLM for a while, now may not be the most advantageous 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. To help with this, we've discovered 2 warning signs (1 is a bit unpleasant!) that you ought to be aware of before buying any shares in Martin Marietta Materials.

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.

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

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