Vulcan Materials Earnings: Resilient Pricing More Than Offsets Volume Headwinds

Narrow-moat-rated Vulcan Materials' fourth-quarter results were ahead of our expectations as the firm realized higher selling prices despite mixed end market demand. Net sales rose 1.1% year over year as gains in aggregates and asphalt were offset by a large divestiture in the company’s concrete business. Vulcan reported an impressive 29.7% adjusted EBITDA margin in the quarter, up almost 400 basis points from a year ago, driven by strong results in the aggregates business. While some demand headwinds remain, Vulcan continues to push higher selling prices in its aggregates business despite lower volumes, which we think is a testament to the company’s durable pricing power. As such, we have increased our fair value estimate to $185 per share from $169 due to higher near-term selling prices and profitability in our forecast.