Vulcan Materials Co (VMC, Financial) recently experienced a daily loss of 2.62%, adding to a three-month decline of 5.33%. However, with an Earnings Per Share (EPS) of 6.17, investors are keen to understand whether the stock is fairly valued at its current market price. This article delves into the valuation analysis of Vulcan Materials Co (VMC), providing readers with a detailed exploration of its financial health and intrinsic value.
Vulcan Materials Co is the United States' leading producer of construction aggregates, a pivotal player in the building materials industry. With a market cap of $28 billion and robust sales of $7.70 billion, the company boasts a significant operating margin of 16.57%. But how does its current stock price of $210.87 measure up against its fair value? We invite you to explore the following analysis to understand Vulcan Materials Co's valuation better.
Summarizing GF Value for Vulcan Materials Co (VMC, Financial)
The GF Value is a unique measure that reflects Vulcan Materials Co's intrinsic stock value. It incorporates historical trading multiples, a GuruFocus adjustment factor based on past returns and growth, and future business performance forecasts. The GF Value Line, a graphical representation, suggests the fair trading value for the stock. Currently, Vulcan Materials Co (VMC) is deemed fairly valued, with a GF Value of $230.26, suggesting that its long-term stock return should align closely with the company's growth rate.
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Financial Strength of Vulcan Materials Co
A critical step in stock evaluation is assessing a company's financial strength. Vulcan Materials Co's fair financial strength is reflected in its cash-to-debt ratio of 0.08. Despite being lower than many of its industry peers, the company's financial strength rating stands at 6 out of 10.
Profitability and Growth Prospects
Investing in profitable companies like Vulcan Materials Co, which has maintained profitability for the last decade, is generally less risky. The company's impressive operating margin of 16.57% is a testament to its efficiency and ranks well within its industry. Furthermore, Vulcan Materials Co's consistent revenue growth, averaging 14% annually, outperforms 76.62% of its industry competitors.
Assessing ROIC vs. WACC
Comparing Vulcan Materials Co's Return on Invested Capital (ROIC) of 7.31% with its Weighted Average Cost of Capital (WACC) of 9.32% indicates that the company is not currently generating value above its cost of capital. This comparison is crucial for understanding the company's value creation efficiency.
Conclusion
In conclusion, Vulcan Materials Co (VMC, Financial) appears to be fairly valued, with solid financials and strong profitability. Its growth outpaces a significant portion of its industry, and its stock price closely mirrors its business growth rate. For a deeper dive into Vulcan Materials Co's financials, view the 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
