Vulcan Earnings: Pricing Continues to Drive Growth Despite Flat Shipments

Narrow-moat-rated Vulcan Materials reported strong fourth-quarter results that wrapped up an impressive year for the company. While end market demand was largely flat for most of the year, robust price growth across Vulcan’s entire portfolio drove solid financial results. Net sales in the fourth quarter rose almost 6% year over year, while full-year 2023 sales were up 6.5% from the year before. Consolidated gross margins in the fourth quarter expanded more than 500 basis points to 25.7%, largely due to contributions from Vulcan’s aggregates and asphalt businesses. Vulcan continues to wield its pricing power, especially in its competitively advantaged aggregates business. While we expect overall end market demand will remain roughly flat for 2024, additional pricing gains across its portfolio should drive solid growth for Vulcan. As such, we have increased our fair value estimate to $162 from $154 per share.