TRG | The Bottom Line – 9/5

Martin Marietta Materials earlier this week hosted an Investor Day to introduce SOAR 2030 that sees a continuation of growth and profitability metrics and a 10%+ EBTIDA CAGR to get to $3.7B on what TRG views as very reasonable expectations. The $3.7B EBITDA (vs. 2025 estimates of $2.3B) is the mid-point of what is possible, implying 60%+ growth. MLM’s last investor day in 2021 set out SOAR 2025 goals that aimed for a doubling of the market cap by 2025 largely through acquisition while continuing the successful strategy of driving pricing growth and increased profitability. These goals have thoroughly been achieved in our view. MLM is larger, more profitable, has driven pricing in the absence of true volume growth, and (maybe most importantly) is more aggregates led than before. Where could MLM stock go if the company is able to achieve goals outlined in this week’s investor day? Back-of-the-envelope calculations can arrive at much higher levels versus today. MLM has doubled the market cap over each of the past SOAR initiatives and laid out a case that again doubles EBTIDA and implies a further doubling of the market cap. We see no reason to doubt MLM’s targets given the track record that the company has proven over the past SOAR initiatives, that the 2030 targets are a continuation of what MLM has already been doing and not viewed as stretch goals, and the demand backdrop combined with upside from potential volume recovery.