Vulcan Materials Company (VMC)

Conclusion

Vulcan Materials Company produces construction aggregates, asphalt and ready-mixed concrete in the United States. At a price of 289.44 USD on 2026-11-09, its market capitalisation is 37.1 billion USD.

The verdict is overvalued. Today's multiples sit close to their own ten-year medians: the price to earnings ratio is 33.7 against a median of 36.9, and enterprise value to EBITDA is 18.5 against 18.6. Price to book is 4.4 against a median of 3.6, and price to free cash flow is 47.6 against 43.2. The discounted cash flow value is 122.44 USD per share at a discount rate of 9.86%. The fair value band runs from 159.14 to 238.70 USD with a midpoint of 198.92 USD, giving a margin of safety of -31.3% at the current price. The reverse DCF implies growth of 20.0% a year, while revenue grew at 10.3% and free cash flow per share at 10.1% a year over five years.

What holds the case up is the balance sheet and the quality of earnings: a Piotroski score of 9 out of 9, an Altman Z-score of 3.99 and free cash flow conversion of 88.7% over five years. What would break it is the return on capital, with ROIC at 9.1% against a WACC of 9.1%, and the estimate revisions, with 17 downward revisions for next year against one upward in the last 30 days. Net debt to EBITDA of 2.25 is the third weak number to watch, since it leaves less room if earnings fall.

Financial health

Financial strength is green, held up by the Altman Z-score of 3.99 and a current ratio of 1.43, while net debt to EBITDA of 2.25 and interest coverage of 7.26 are only neutral. The quick ratio is 0.84 and debt to equity is 0.63. The Altman Z-score sits in the safe zone, although the model was designed for manufacturers, so it is only a rough guide for a producer of construction materials. Insolvency risk: low, about 0.3% by the estimate of the Ohlson model over one to two years. The company's interest expense is reported, so coverage is computed on a trailing twelve-month basis and is not an estimate.

Earnings quality

Earnings quality is green, supported by a Piotroski score of 9 out of 9, a Beneish M-score of -3.08, which is read as unlikely manipulation, and an accrual ratio of -0.043. Free cash flow conversion is 70.8% on a trailing basis and 88.7% over five years. Stock-based compensation is 0.6% of revenue, and free cash flow after it is 734.7 million USD. The share count has fallen at a compound rate of 0.2% over five years, which points to buybacks. The company beat estimates in 6 of the last 8 quarters, with an average surprise of 8.1%. Estimate revisions are negative: the current year is down 3.8% over 90 days, and next year is down 6.4%.

Profitability

Profitability is green. Margins are above their ten-year medians: gross margin is 27.5% against 25.5%, operating margin 19.9% against 18.3%, and net margin 13.8% against 12.1%. Return on invested capital is 9.1% against a WACC of 9.1%, so the spread is essentially zero and the classification is neutral. The five-year median ROIC is 7.9%. Return on equity of 13.1% is not inflated by leverage: the DuPont split shows a net margin of 13.6%, an asset turnover of 0.475 and an equity multiplier of 1.959, so most of the return comes from margins and turnover.

Growth

Growth is green. Revenue compounded at 2.7% over three years, 10.3% over five and 8.8% over ten. Earnings per share compounded at 23.9% over three years, 13.3% over five and 17.5% over ten. Free cash flow per share compounded at 29.0%, 10.1% and 18.4% over the same periods. Revenue grew in 8 of the 10 comparable years. The next-year earnings growth estimate of 14.8% is positive, but it has been revised down.

Valuation

Valuation is red. The price to earnings ratio of 33.7 is 8.7% below its ten-year median of 36.9, and enterprise value to EBITDA of 18.5 is 0.7% below 18.6. Price to free cash flow of 47.6 is 10.1% above 43.2, price to sales of 4.6 is 5.1% above 4.4, and price to book of 4.4 is 21.7% above 3.6. The discounted cash flow value is 122.44 USD at a discount rate of 9.86%, and about 54.5% of that value comes from the terminal value. The fair value from historical multiples is 275.40 USD. The fair value is an order of magnitude built on fixed assumptions, including a 5% equity risk premium and capped growth, not a price target. The dividend yield is 0.72% and the payout on free cash flow is 34.1%.

Risks

The main risk is leverage: net debt to EBITDA of 2.25 means a fall in earnings would raise the ratio quickly. Interest coverage of 7.26 would shrink with lower profits. ROIC equal to WACC means the company earns only its cost of capital, so a margin decline would push returns below it. Falling estimates weaken the growth case, and the reverse DCF already requires 20.0% annual growth. Several inputs are not available for this analysis: there is no debt maturity schedule and no revenue split by segment, so refinancing risk and the relative weight of asphalt and concrete cannot be assessed.