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Summit Materials Inc A SUM

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President Biden's Infrastructure Plan Would Benefit Aggregates, but Rally Limits Upside From Here

Analyst Note

| Kristoffer Inton |

On March 31, President Joe Biden’s administration released the initial details of its infrastructure plan, proposing $2 trillion in total spending over eight years. Of this, $621 billion would be directed toward transportation infrastructure, averaging nearly $80 billion per year in spending compared with roughly $60 billion per year from the FAST Act passed in 2015. Current highway funding is set to expire in September, giving Congress and the White House half a year to reach a deal. We continue to expect an agreement will be reached, driving increased infrastructure activity and higher volume for heavy building materials.

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Company Profile

Business Description

Summit Materials is a top-10 aggregates supplier and top-15 cement producer in the U.S. Founded as a roll-up strategy in 2009, the company has grown through a very active acquisition strategy. While cement and aggregates constituted about 35% of the firm's revenue in 2020, these higher-margin businesses constituted nearly 55% of gross profit. Summit's downstream businesses and services include asphalt, ready-mix concrete, and paving. While these constitute about 65% of revenue, their lower margins lead to gross profit contribution of roughly 45%.

1550 Wynkoop Street, 3rd Floor
Denver, CO, 80202
T +1 303 893-0012
Sector Basic Materials
Industry Building Materials
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 6,000