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Tuesday, Vulcan Materials Company (NYSE:VMC), currently trading at $239.77 with a market capitalization of $31.7 billion, received a positive assessment from Stifel analysts, as coverage was resumed with a Buy rating and a price target set at $287.00. According to InvestingPro data, the stock is trading near its 52-week low, with analyst targets ranging from $172.75 to $343.00. The analysts highlighted several key aspects contributing to their optimistic outlook on the company.
Firstly, they praised Vulcan Materials for its strategic focus on aggregates, which accounts for approximately 90% of the company’s gross profits, the highest mix among its public peers. This focus is seen as a significant strength for Vulcan Materials, reflected in its robust gross profit margin of 27% and EBITDA of $2.05 billion over the last twelve months.
Moreover, Stifel analysts noted Vulcan Materials’ advantageous footprint, particularly across the Southern United States, with Texas making up about 20% of its sales. This regional strategy is expected to benefit the company’s performance.
The analysts also pointed out Vulcan Materials’ Vulcan Way of Selling initiative, which has been instrumental in capturing pricing. Since its inception in 2017, the initiative has led to cumulative pricing growth that is 1.3 times higher than that of Vulcan’s peers.
In addition to these factors, Vulcan Materials was recognized for having the highest gross profit per ton among its peers, which Stifel analysts believe reflects the company’s strong execution track record.
Lastly, the analysts mentioned the potential for mergers and acquisitions within the aggregates sector, considering the industry’s fragmentation. They see this as an area of opportunity for Vulcan Materials to further enhance its market position.
Stifel’s endorsement comes with a detailed analysis of Vulcan Materials’ strategic approaches and market potential, providing a comprehensive rationale for the Buy rating and the $287.00 price target.
In other recent news, Vulcan Materials Company reported impressive fourth-quarter 2024 results, surpassing analysts’ expectations with an earnings per share of $2.17, compared to the forecasted $1.78, and revenue of $1.85 billion, exceeding projections by $40 million. This strong performance was driven by effective cost management and strategic acquisitions, contributing to a 16% year-over-year improvement in adjusted EBITDA for the quarter. Analysts from various firms have shown confidence in Vulcan Materials, with Truist Securities maintaining a Buy rating and a $315 price target, citing the company’s strong pricing strategy and potential growth from infrastructure investments. Similarly, DA Davidson reaffirmed a Buy rating with a $325 price target, highlighting Vulcan’s resilience in margins despite weaker volumes in the U.S. construction sector. Jefferies analyst Philip Ng raised the price target to $335, noting the company’s ability to grow EBITDA by 12% despite flat organic volumes and economic constraints. Loop Capital also increased their price target to $325, reflecting Vulcan’s strong fourth-quarter performance and effective cost control. These developments indicate a positive outlook for Vulcan Materials as it continues to navigate market challenges and capitalize on strategic growth opportunities.
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