马丁玛丽埃塔

We are transferring coverage of US building materials companies Vulcan Materials, Martin Marietta, and Amrize. The companies produce aggregates, cement, ready-mix concrete, and other building materials used across infrastructure, nonresidential, and residential construction.

The bottom line: We are increasing our fair value estimates for Vulcan to $238 per share from $198 and Martin Marietta to $496 per share from $440, while lowering our fair value estimate for Amrize to $42 per share. We are also upgrading our moat ratings for Vulcan and Martin Marietta to wide and maintaining our narrow moat rating for Amrize. Our moat upgrades reflect our confidence in the visibility and durability of cash flows generated by their aggregate businesses. High barriers to entry constrain new quarry development, while aggregates’ low value-to-weight ratio makes transportation over long distances uneconomical, creating highly localized markets. Within these localized markets, Vulcan and Martin Marietta benefit from strong positions. Aggregates are essential to construction with no substitutes, and the limited ability to source material from farther away reduces competition and supports sustained pricing power.

Long view: We expect a favorable construction backdrop to support aggregates demand over the medium to long term, with public infrastructure spending providing a relatively stable base of activity and large-scale nonresidential projects adding incremental growth. The Infrastructure Investment and Jobs Act has provided a meaningful tailwind to construction activity, with more than $350 billion authorized for highways and bridges. A significant portion of this funding remains to be deployed, while policymakers are also working on a successor transportation bill which could extend this supportive spending environment beyond the current program. We also expect continued investment in data centers and manufacturing to support nonresidential construction activity.

We are increasing our fair value estimate for Martin Marietta to $496 per share from $440, primarily reflecting our moat upgrade. Our revised valuation equates to 31.5 times our 2026 adjusted earnings per share.

We forecast consolidated sales to grow at roughly a 10% compound annual rate over our 10-year explicit forecast period, supported by public infrastructure spending and the addition of Lhoist. Around 40% of Martin Marietta’s aggregate shipments serve public infrastructure projects, making infrastructure its largest and most aggregate-intensive end market. The Infrastructure Investment and Jobs Act has provided a meaningful tailwind to construction activity, with more than $350 billion authorized for highways and bridges. A significant portion of this funding has yet to be deployed and policymakers are also working toward a successor transportation bill, Build America 250. We therefore expect federal infrastructure spending to remain supportive over the medium term. We also expect nonresidential construction demand to remain supported by elevated data center activity, along with continued investment in manufacturing and other large-scale projects. While residential activity remains pressured by affordability and higher mortgage rates, Martin Marietta is well positioned in states with relatively strong population and employment growth. Together, these factors support our expectation for 3% average annual aggregate volume growth. Local supply and strong market positions should allow pricing to increase around 4% annually and continue outpacing cost inflation over the long term.

For the lime business, we forecast average annual revenue growth of around 4%, supported by diversified exposure to infrastructure, industrial, and environmental end markets, which should provide relatively steady demand over time. Favorable industry price/cost dynamics should also support continued pricing growth.

We forecast consolidated operating margins to reach around 30% by the end of our explicit forecast period. In aggregates, we expect continued margin expansion supported by pricing and greater local market concentration. The addition of Lhoist should further lift consolidated margins given the higher profitability of the lime business.

Beyond our explicit forecast period, our stage two assumptions incorporate a 16.7% return on new invested capital and 5% annual earnings before interest growth for the following 10 years.

We assign Martin Marietta a wide moat based on intangible assets and cost advantage, and we expect the firm to generate returns above its weighted average cost of capital for at least the next 20 years. The moat is primarily supported by its aggregates segment and the newly added lime production business.

Aggregates currently account for around 80% of the company’s revenue, and Martin supplies aggregates through a network of approximately 400 quarries and distribution yards. Aggregates are heavy, low-value-to-weight raw materials extracted by drilling and blasting rock from quarries or pits, then crushing, screening, and washing the material into graded sizes for sale. Quarry owners benefit from high barriers to entry because opening a new site requires extensive permitting and regulatory approvals. Approvals have become increasingly difficult, and the process can take up to 10 years from land acquisition to the first sale of materials. Opposition from local communities can further delay or prevent new development. These barriers significantly limit the addition of new capacity in established markets. With quarry lives typically spanning over 50 years, an existing permit can protect an incumbent's market position for decades. We view these difficult-to-obtain permits as an intangible asset moat source for aggregate producers.

Aggregates generally sell for around $20 per ton, making transportation costs significant relative to the value of the product. Trucking, the most common form of transportation, typically becomes uneconomical beyond 50 miles because hauling costs exceed the cost of the stone itself. Since these freight costs are generally passed on to customers, buyers have a strong incentive to source from nearby quarries. This creates highly localized markets and, in some cases, producers operate as virtual monopolies within their service areas. So, a transportation cost advantage can arise from proximity to customers. This market structure provides producers with meaningful pricing power and has allowed them to consistently raise prices above inflation in 30 of the last 33 years.

Aggregates also have no substitutes and represent a relatively small portion of total construction costs, ranging from roughly 2% for residential construction to about 10% for roads. As a result, customers are relatively insensitive to modest price increases, particularly given the much larger cost of switching to a more distant supplier.

Acquisitions are the primary way Martin Marietta expands its footprint. Since its IPO in 1994, the company has completed more than 100 acquisitions. Given the difficulty of developing new quarries, acquiring an existing permitted operation is often the most practical way to enter attractive local markets or strengthen an existing market position. Acquisitions can also increase Martin’s concentration within markets where it already operates, which can strengthen pricing power and support higher margins. While this strategy can weigh on reported ROIC by increasing the company’s invested capital base, we do not believe it weakens the economics of the underlying quarry assets.

The specialties segment produces lime and magnesia-based products and has historically accounted for a mid-single-digit percentage of Martin Marietta’s revenue. However, the company’s $13.5 billion acquisition of Lhoist North America, announced in June 2026, will significantly increase the segment’s contribution to consolidated revenue. LNA is the largest producer of lime in the US, with its products serving steel manufacturing, infrastructure, water treatment, and other industrial end markets. The company holds roughly 31% share of the North American lime market, giving Martin Marietta a significant position in an industry where permitting requirements, scarce high-quality reserves, and capital-intensive kiln capacity limit new entry. Lhoist has more than 2 billion tons of limestone reserves, representing more than 200 years of production at current rates.

We believe the lime business also warrants a wide moat. The lime business benefits from meaningful barriers to entry stemming from both reserve quality and the difficulty of developing new production capacity. Lime production requires limestone or dolomite with relatively specific chemical characteristics, limiting the number of viable reserve bases. The relative scarcity of suitable reserves reduces the number of viable quarries and makes it more difficult for new entrants to secure a location. Lime kilns are also capital-intensive and subject to significant environmental permitting requirements given their carbon dioxide emissions, making the development of new capacity difficult. Lime also has limited substitutes across many of its end markets. All these factors combined support strong pricing power.

We assign no moat to Martin Marietta’s other building materials business, which consists of cement, ready-mixed concrete, asphalt, and paving services. We believe cement is the only business within this segment that exhibits moat-worthy characteristics, supported by high capital requirements and regulatory barriers to establishing new production capacity. However, cement does not represent a large enough portion of the segment to materially contribute to its moat. Ready-mixed concrete, asphalt, and paving services are more commoditized and have significantly lower barriers to entry.

Acquisitions help strengthen pricing power and local presence in a region and improve margins subsequently.

Bipartisan approval for the proposed reauthorization of a new infrastructure funding program in the US will provide a healthy demand environment in the medium term.

The Lhoist acquisition increases Martin Marietta’s margin expansion potential while diversifying its end-market exposure beyond construction.

A smaller or delayed successor to current federal infrastructure funding, or weaker funding in Martin Marietta’s key states, could weigh on aggregate demand.

Martin Marietta’s earnings can be affected by factors outside its control, including adverse weather conditions, which can delay construction activity and reduce shipments.

Paying high multiples for acquisitions could limit the returns generated on acquired assets, even when the underlying businesses are attractive.