Yahoo Finance Is There Now An Opportunity In Martin Marietta Materials, Inc. (NYSE:MLM)?
Let's talk about the popular Martin Marietta Materials, Inc. (NYSE:MLM). The company's shares led the NYSE gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Martin Marietta Materials’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Check out our latest analysis for Martin Marietta Materials
What's the opportunity in Martin Marietta Materials?
According to my valuation model, Martin Marietta Materials seems to be fairly priced at around 8.1% below my intrinsic value, which means if you buy Martin Marietta Materials today, you’d be paying a fair price for it. And if you believe that the stock is really worth $216.29, then there isn’t much room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Martin Marietta Materials’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What does the future of Martin Marietta Materials look like?
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. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -2.3% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Martin Marietta Materials. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? MLM seems fairly priced right now, 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.
Are you a potential investor? If you’ve been keeping tabs on MLM for a while, now may not be the most optimal 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. In addition to this, 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 gel your views on MLM should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Martin Marietta Materials. You can find everything you need to know about Martin Marietta Materials in the latest infographic research report. If you are no longer interested in Martin Marietta Materials, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
