Just How Solid Are Vulcan Materials' Fundamentals?

VMC has chart support in place after its February record high

Mar 19, 2021 at 10:02 AM
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Vulcan Materials Company (NYSE:VMC) is one of the United States’ largest producers of construction materials. Vulcan stock has nearly doubled in value year-over-year. The shares scored a record high of $175.02 back on Feb. 24, and the consolidation afterward has been contained by their 30-day moving average.

On February 12, Vulcan Materials announced an increase to its quarterly dividend up to $0.37 per share. The new quarterly dividend represented a $0.03 or 8.8% increase. Vulcan’s forward dividend now stand at $1.48, which equates to a dividend yield of 0.88%.

VMC Stock Chart

Fundamentally, Vulcan Materials stock valuation is undoubtedly on the pricier side, with its price-earnings ratio coming in at a 38.33. VMC's forward price-earnings ratio is also rich at 33.44. Its high valuation is likely a result of the company fast growing revenues. Although Vulcan Materials revenues decreased by $75 million in fiscal 2020, the company still managed to increase sales by roughly $1 billion since fiscal 2017. Vulcan Materials total annual sales currently stand at $4.86 billion.

Vulcan Materials has lacked consistent growth on the bottom-line. The company has lost $33 million in net income over the past year and is currently down about $15 million since fiscal 2017. VMC last reported $584 million in annual net profits for 2020. Moreover, the company doesn’t have the greatest balance sheet. With a debt load of $3.73 billion, Vulcan Materials' cash amount of $1.2 billion is less than a third of what it owes. Overall, the company’s current valuation makes the most sense with a 3-4 year holding period on the stock. The Vulcan Materials stock is likely best suited for long-term investors.

 

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