On Monday, Morgan Stanley (NYSE:MS) adjusted its outlook on shares of Vulcan Materials Company (NYSE:VMC), reducing the price target to $282 from the previous $290 while maintaining an Equalweight rating on the stock. The revision comes ahead of Vulcan Materials' second-quarter 2024 performance and is based on a lowered earnings forecast.
The firm's updated analysis anticipates a 3% reduction in the 2024 EBITDA estimate, now set at $2,183 million. The valuation approach remains consistent with an 18.5x EV/EBITDA multiple, aligning with the valuation of Vulcan's peer, Martin Marietta Materials (NYSE:NYSE:MLM). Morgan Stanley's adjustments reflect a series of revised projections for Vulcan Materials' financials.
Specifically, the estimated adjusted EBITDA for the second quarter of 2024 has been marked down to $597 million from the earlier forecast of $666 million. Moreover, the full-year 2024 adjusted EBITDA expectation has been lowered to $2,183 million from $2,252 million.
Corresponding earnings per share (EPS) estimates have also been revised, with second-quarter 2024 EPS now projected at $2.36, down from $2.76, and full-year 2024 EPS anticipated to be $8.30, a decrease from the prior estimate of $8.69.
The revised forecast by Morgan Stanley takes into account a combination of factors impacting Vulcan Materials' performance. These include a decrease in organic volume growth for aggregates in the second quarter due to unfavorable weather conditions delaying projects.
Moreover, a lower aggregates margin is expected, attributed to relatively weak volume and the absorption of fixed costs. Furthermore, the forecast incorporates an increase in the company's capital expenditures for 2024, as indicated by Vulcan's guidance.
In other recent news, Vulcan Materials Co has been at the center of noteworthy developments. The U.S. construction company has publicly criticized the Mexican government's actions concerning its operations, denouncing them as an "illegal expropriation" of its investments. This dispute stems from the halt of Vulcan's limestone quarrying activities in Quintana Roo, Mexico, due to alleged environmental harm, a claim Vulcan contests.
In the realm of financial performance, Vulcan Materials reported a solid start to the first quarter of 2024, generating $323 million in adjusted EBITDA and demonstrating progress towards a fourth consecutive year of double-digit adjusted EBITDA growth. Despite a 6.24% decrease from the previous year, the company's revenue of $1.55 billion exceeded the average analyst expectation of $1.49 billion.
In terms of analyst evaluations, JPMorgan (NYSE:JPM) revised its rating for Vulcan from "Overweight" to "Neutral" while raising the price target to $270. In contrast, RBC Capital modestly increased its price target for Vulcan from $269.00 to $272.00, maintaining its Sector Perform rating. These recent developments underscore the evolving landscape for Vulcan Materials in the business and financial sectors.
InvestingPro Insights
Amidst revisions in Vulcan Materials Company's (NYSE:VMC) financial outlook by Morgan Stanley, InvestingPro data provides additional context to the company's valuation and performance metrics.
Vulcan Materials boasts a market capitalization of $33.72 billion, paired with a P/E ratio of 36.99, which slightly adjusts to 37.46 when looking at the last twelve months as of Q1 2024. Despite a modest revenue growth of 3.44% in the same period, the company has shown a notable EBITDA growth of 20.62%, underscoring its operational efficiency.
InvestingPro Tips reveal that Vulcan Materials has a stellar Piotroski Score of 9, indicating strong financial health, and has consistently raised its dividend for 10 consecutive years, showcasing a commitment to shareholder returns.
Moreover, the company has been profitable over the last twelve months and has a history of high returns over the last decade. However, it is worth noting that analysts have revised their earnings downwards for the upcoming period, which could be a point of consideration for investors.
For those looking to delve deeper into Vulcan Materials' financials and to access more InvestingPro Tips, including the company's ability to maintain dividend payments for 54 consecutive years and its liquidity position, a visit to https://www.investing.com/pro/VMC is recommended. There are an additional 11 InvestingPro Tips available, which could provide valuable insights for investors. To enhance your investment research, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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