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Inside the real Martin Marietta

Mar, 12 2010

Earnings releases can make investing tricky. Many traders try to time trades based on earnings filings, but usually find such trading is difficult and dangerous. It is often better to take a look at how the market has reacted to a company’s results a few weeks after the initial announcement.

Martin Marietta Materials Inc. (MLM) released its earnings announcement on 02/09. The company reported a change in quarter-over-quarter sales of -20.36% and posted an EPS (trailing twelve months) of 1.90.

By now the market has had time to settle in and look closely at the numbers. A stock’s performance in the few weeks following an announcement, compared to other stocks in its industry, the industry as a whole, and market as a whole, really tells you how investors and analysts felt about the announcement.

Compared to peers

One way to gauge performance is look at a stock compared to other stocks in its industry with similar market caps. MLM peer Owens Corning (OC) has seen a 3.69% stock price gain over about the last month, while another peer, MDU Resources Group Inc. (MDU) saw a 7.99% gain. So with a return of 4.65%, Martin Marietta Materials Inc. outgained OC and under-performed MDU’s price performance over the last month.

Vulcan Materials Company (VMC) is one of the largest stocks in the industry in terms of market cap, and over the same period has returned 5.23% in price.

Compared to the S&P 500 Index

Now, let’s see how Martin Marietta Materials Inc. stock performance compares to the rest of the market by looking at it compared to the Standard & Poor’s 500 Index (.INX). Since 02/09, the S&P 500 index has returned around 6.5%, and again, MLM saw about a 4.65% gain during that time. Could be better.

Compared to the rest of the “General Building Materials” industry

Since the MLM announcement (about 30 days ago), the stock has posted a 4.65% gain. Over that same period, the stock’s industry, General Building Materials, saw a 8.71% gain. That means MLM that has under-performed its industry as a whole 46.61% since the earnings announcement. Small differences aren’t significant, but when the spread is large it indicates the stock is either much more or much less favored than its group as a whole.