Tuesday, October 30, 2007

MLM’s results better than VMC

Kudos to Steve Zelnak and his team at Martin Marietta Materials. When comparing their performance to rival VMC, Martin clearly came out ahead this quarter. While Vulcan could do no better than flat earnings in the face of the housing downturn, MLM grew earnings significantly. They increased net sales by 4% and earned $2.12 per share. The earnings figure had $.12 of tax benefit included and I’m not sure if the analyst community had that factored into their consensus figure of $2.04. Results could be either a Beat or a Miss depending on if the tax impact was expected, or not. Either way it was one helluva quarter. Better than I was expecting. My guestimate of 10/27/07 overestimated income taxes as the company actually had a tax rate for the quarter of 26%.
The conference call should shed more light on the future, but Zelnak did state that they are seeing a “pause” in some types of commercial construction in addition to the residential carnage. They are still looking for a good finish to the year. no word about 2008 yet.
Today will be interesting as VMC was down $5 in the premarket and both of these companies will be having conference calls. At to that all the Fed interest rate cut chatter and who knows what MLM’s share price will be by market close. The good news for my Puts is that while MLM had a good quarter, they didn’t say that shipments were increasing and the construction slowdown was over. I still don’t think they can hit the 2008 projections that analysts are counting on so I’m content to wait.

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