Demand For Construction Materials Down, But Prices Stable (MLM, VMC)

The demand for construction materials was down 27% y/y. However aggregate prices have demonstrated signs of greater stability over prior months, although concerns remain about discounting on large highway projects that will lead to flat-to-down pricing in 1H10 and ~1% pricing for 2010.

Analyst Garik Shmois from LONGBOW Research has revised his estimates for Martin Marietta Materials, Inc (NYSE: MLM) and Vulcan Materials Company (NYSE: VMC) to incorporate weaker volume in 4Q09E from wet weather and weaker than anticipated near-term demand, particularly in Texas. For Martin Marietta Materials, Inc, the analyst forecasts 4Q09E EPS of $0.33 (-$0.09), FY09E EPS of $2.30 (-$0.09) and FY10E EPS of $2.80 (-$0.75). The current FY09E EPS is at the low-to-mid end of management’s $2.20-2.45 guidance range. For Vulcan Materials Company, 4Q09E EPS has been reduced to ($0.05) vs. +$0.08 prior.