Martin Marietta Materials Inc (MLM)

Conclusion

Martin Marietta Materials supplies aggregates, ready-mixed concrete, asphalt and magnesia-based chemicals, mainly to construction and infrastructure customers in the United States. At 530.97 USD on 9 November 2026, the company has a market capitalisation of 37.7 billion USD and an enterprise value of 50.4 billion USD.

The verdict is overvalued. The fair value band runs from 277.93 to 416.89 USD with a midpoint of 347.41 USD, giving a margin of safety of -34.6% at the current price. The P/E of 16.4 sits below its ten-year median of 27.6, while EV/EBITDA of 23.8 sits above its median of 15.5. The DCF gives 198.37 USD per share, and the fair value from historical multiples is 496.45 USD. The reverse DCF implies growth of 19.1% a year, against revenue growth of 6.7% and free cash flow per share growth of 7.9% over five years.

What holds the case up is earnings quality, with a Piotroski score of 7 out of 9, free cash flow conversion of 62.8% over five years and a share count that fell 0.6% a year over five years. What would break it is the return on capital: ROIC of 3.6% against a WACC of 8.5%, a ROIC minus WACC value of -4.9%. Leverage is also high, with net debt to EBITDA at 6.0x, and current-year estimates have been revised down by 8.6% over 90 days.

Financial health

Yellow, because the current ratio of 1.63 is good, while net debt to EBITDA of 6.0x is bad. The quick ratio is 0.83, debt to equity is 0.73 and interest coverage is 4.3x, which is neutral. The Altman Z-score of 1.82 falls in the grey zone. The Altman model was designed mainly for manufacturers, so it should be read with caution for a producer of building materials. Insolvency risk: low, about 0.3% by the estimate of the Ohlson model over one to two years. The company's leverage is the main pressure point, since a fall in earnings or a rise in borrowing costs would weigh heavily on debt service.

Earnings quality

Green, because the Piotroski score of 7 out of 9 and the falling share count are good, and free cash flow conversion is neutral. Trailing free cash flow conversion is 38.0%, against 62.8% over five years, so recent cash generation is weaker than its history. The accrual ratio is -0.0351, and stock-based compensation is 0.7% of revenue, leaving free cash flow after stock compensation of 822 million USD. The Beneish M-score is not available. The company beat earnings estimates in seven of the last eight quarters, with an average surprise of 3.2%. However, estimates for the current year fell 8.6% over 90 days, and those for next year fell 5.3%.

Profitability

Yellow, because ROIC minus WACC is bad and the operating margin is good. The gross margin is 26.7% against a ten-year median of 24.9%, and the operating margin is 18.6% against a median of 19.1%. The net margin of 32.0% is well above its median of 14.7%. The return on capital is the weak point: ROIC is 3.6% against a WACC of 8.5%, and the five-year median ROIC is 8.4%. Return on equity is 13.1%. The DuPont split for 2025 shows a net margin of 17.4%, an asset turnover of 0.35 and an equity multiplier of 1.87, so leverage supports the return on equity.

Growth

Green, because the EPS growth and the forward estimate are good, and revenue growth is neutral. Revenue compounded at 2.0% over three years, 6.7% over five years and 6.3% over ten years. EPS compounded at 10.7% over three years, 10.2% over five years and 15.9% over ten years. Free cash flow per share compounded at 25.6% over three years and 7.9% over five years. Revenue grew in eight of the last ten years. Next year's EPS is estimated to grow 24.0%, a rate well above the historical record.

Valuation

Red, because the verdict is overvalued, with a margin of safety of -34.6%. The P/E of 16.4 is 40.8% below its ten-year median of 27.6, and the P/B of 2.1 is 33.6% below its median of 3.2. The EV/EBITDA of 23.8 is 53.6% above its median of 15.5, the P/S of 5.2 is 29.6% above its median of 4.0 and the P/FCF of 43.1 is 7.0% above its median of 40.3. The DCF uses a discount rate of 10.0% and gives 198.37 USD per share, with about 52% of value in the terminal value. The dividend yield is 0.6% and the payout on free cash flow is 24.1%. The fair value band is an order of magnitude built on fixed assumptions, including a 5% equity risk premium and capped growth. It is not a price target.

Risks

Leverage is the most immediate risk: net debt at 6.0x EBITDA leaves little room if earnings fall or borrowing costs rise, and interest coverage of 4.3x would narrow quickly. The ROIC of 3.6% against a WACC of 8.5% means new capital is currently earning less than it costs, so growth may not create value. Falling estimates for the current and next year could lower the earnings base on which the multiples rest. The DCF and the reverse DCF both depend heavily on the terminal value and on long-run growth assumptions. The Beneish M-score is not available. This analysis has no debt maturity schedule and no revenue breakdown by segment, so refinancing risk and the mix of revenue cannot be assessed.