To The Moon

$Martin Marietta Materials(MLM)$ is a natural resource-based building materials company. Over the past 17 years, its revenue grew at a 7.1 % CAGR via both organic growth and acquisitions. Over the same period, the US total construction spending only grew at 2.7 % CAGR.

You would think that MLM should be analyzed and valued as a growth company. But the following shows that this is not the case:

• MLM serves a low-growth cyclical construction sector. While its revenue grew faster than construction spending, this was via a combination of acquisitions and product mix changes.

• The growths and changes did not translate into positive trends for all the metrics that drove returns. ROE declined. Gross profitability also declined. Capital efficiency got worse.

You can get a sense of the poor fundamentals from the chart below:

A Greenwald "Asset Value vs. EPV" analysis indicates that this is not a "franchise”. This is not a growth stock. Based on its Book Value or EPV, there is no margin of safety.

I am a long-term value investor holding onto companies for 6 to 8 years. I thus analyze and value companies from this perspective. If you want more insights on value investing, visit my blog i4value.asia