Vulcan Materials Company
Vulcan Materials Company (VMC) based in Alabama primarily operates in the production, distribution and sale of construction materials. The revenue for the last quarter declined year on year which might be a cause of concern for this company, but let’s deep dive into the stock to find out how to trade the stock in the near term.
Vulcan Materials Company has been operating for more than 100 years now and is the nation’s largest producer of construction aggregates primarily dealing with crushed stone, sand and gravel. When Vulcan Materials Company celebrated it’s 50th anniversary as a publicly held company at the same year it was in the Fortune Magazine’s list of Most Admired Companies for the sixth time in 2007. It has been one of the consistent dividends paying company for last several years and has been the favorite of the share holders in the traditional industry.
An Analytic Approach of Vulcan Materials Company
The stock reached a low of 84 USD in March 2020 during the peak of the pandemic and moved up from that point to reach 167 USD in March 2021. The stock has been up by almost 100% in the last one year and it is at its lifetime high right now.
At a P/E of 38.19, the stock is not cheap by any stretch of imagination and considering the industry it is in, the valuation looks pretty stretched. Also, the dividend yield has gone down significantly as the stock price has increased by almost 100%. The forward P/E of 28.33 is also not that attractive. The profit margin of 12.03% is decent enough for Vulcan Material Company to continue expanding in their respective industry. Return on asset of 4.92% is not that attractive either. Considering a market cap of 22.19B the revenue of 4.86B is average for this industry. These metrics paint the picture of an average stock that may have less than average growth possibility of its future share price.
Vulcan does have decent cash in the balance sheet of 1.2B which can be used for capacity expansion. Though the current ratio of 2.17 looks good, total debt of 3.73B makes the debt portion pretty high and the debt burden may slow down the pace of growth. Considering the fundamentals and the recent stock price movement, the current price of $174 as of this writing not seem to be the right price point to enter the stock. However, a decent correction in the stock price and capacity expansion may help the company to be in the consideration set of the investors.