Can Martin Marietta (MLM) Pull a Surprise in Q4 Earnings?

Martin Marietta Materials, Inc.MLM is set to report fourth-quarter 2016 results on Feb 14, before market opens.

Last quarter, the company posted a negative earnings surprise of 5.68%. Meanwhile, it missed estimates in three out of the past four quarters and has an average negative surprise of 23.97%.

Let's see how things are shaping up for this announcement.

Factors to Consider

Martin Marietta posted lower-than-expected results in the third quarter - missing the Zacks Consensus Estimate for both earnings and sales. Nonetheless, the company managed to register year-over-year growth in both the top and the bottom line. This trend is expected to continue in the to-be-reported quarter as well.

The end use of Martin Marietta's products includes infrastructure as well as private residential and non-residential constructions. Sustained growth in private construction as well as non-residential activity increases the demand for both the aggregates and cement businesses of the company.

The company is encouraged by the positive trends witnessed in 2016 in the markets it serves. Non-residential construction is expected to increase in both the heavy industrial and the commercial sectors. Also, residential construction is expected to continue to experience strong growth.

Based on these trends and expectations, including a return to normal weather patterns, the company expects to achieve growth in the infrastructure, non-residential and residential markets in 2016. This should reflect in the upcoming results as well.

The company believes Hurricane activity may affect the upcoming results since it was most active during the third and fourth quarter. Excluding that effect, volume growth for aggregates in the quarter is expected to be about 3% to 7%.

For the fourth quarter, the Zacks Consensus Estimate for earnings is pegged at $1.65, reflecting a 43.9% year-over-year increase. Meanwhile, our estimate for revenues is pegged at $887.6 million, implying a 13.4% increase.

Earnings Whispers

Our proven model does not conclusively show that Martin Marietta will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.

Zacks ESP: The Earnings ESP is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.65. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Martin Marietta's Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about a positive earnings surprise.

You can see the complete list of today's Zacks #1 Rank stocks here .

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Martin Marietta Materials, Inc. Price and EPS Surprise

Martin Marietta Materials, Inc. Price and EPS Surprise | Martin Marietta Materials, Inc. Quote

Peer Releases

Vulcan Materials Company's VMC fourth-quarter 2016 adjusted earnings of 69 cents per share missed the Zacks Consensus Estimate of 83 cents by 16.8%.

Louisiana-Pacific Corporation LPX reported adjusted earnings per share of 23 cents in the fourth quarter of 2016, beating the Zacks Consensus Estimate of 19 cents by 21.1%.

Masco Corporation's MAS adjusted earnings of 33 cents per share in the fourth quarter of 2016 missed the Zacks Consensus Estimate of 34 cents by 2.9%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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