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Last update on 2024-06-06

Martin Marietta Materials (MLM) - Piotroski F-Score Analysis for Year 2023 (Final Score: 9/9)

Martin Marietta Materials (MLM) achieves a perfect Piotroski F-Score of 9/9, indicating strong financial health for 2023.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 9

We're running Martin Marietta Materials (MLM) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
1
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
1
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

The Piotroski F-Score is a metric that evaluates the financial strength of a company on a scale of 0 to 9, based on 9 criteria that assess profitability, liquidity, and operating efficiency. Martin Marietta Materials (MLM) achieved a perfect Piotroski score of 9, suggesting strong financial health.\n\nKey Highlights: \n1. Profitability: MLM has a positive net income of $1.1689 billion and a significant cash flow from operations of $1.5284 billion, meeting key profitability criteria.\n2. Liquidity: MLM’s current ratio improved from 1.99 in 2022 to 3.35 in 2023, reflecting a strong liquidity position.\n3. Efficiency: MLM's gross margin and asset turnover ratio both increased from the previous year, indicating improved efficiency in generating profits and sales from its assets.\n\nOverall, MLM shows strong financial health and operational efficiency across the assessed metrics.

Insights for Value Investors Seeking Stable Income

Given MLM’s perfect Piotroski F-Score of 9, which indicates strong financial health and growth in key areas like profitability, liquidity, and operational efficiency, it is a strong candidate for investment. The company's historical performance and favorable financial metrics suggest stability and potential for future growth. Investors seeking a solid, undervalued stock may find MLM to be a worthwhile addition to their portfolio.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Martin Marietta Materials (MLM)

Company has a positive net income?

Net income represents a company's total earnings, reflecting the amount of money left over after all expenses are deducted. It's a key indicator of financial health.

Historical Net Income of Martin Marietta Materials (MLM)

For the fiscal year 2023, Martin Marietta Materials (MLM) reported a net income of $1,168,900,000, which is a positive figure. Over the last 20 years, MLM has shown a consistent upward trend in net income, increasing significantly from $93.6 million in 2003 to the current level. The most recent figure is a good indicator of the company’s robust financial health and operational success. Given this positive net income, MLM earns 1 point according to the Piotroski F-Score criterion.

Company has a positive cash flow?

The criterion here is Cash Flow from Operations (CFO), which examines if the company generates sufficient cash flow from its core operational activities. Positive CFO indicates healthy operational efficiency.

Historical Operating Cash Flow of Martin Marietta Materials (MLM)

For the year 2023, Martin Marietta Materials (MLM) reports a Cash Flow from Operations (CFO) of $1,528,400,000. This is a positive figure, signifying robust cash generation from its core business activities. Analyzing the historical data over the last two decades, we see a steady and marked improvement in operating cash flow, rising from a mere $277,169,000 in 2003 to $1,528,400,000 in 2023. This upward trend is a positive sign, reflecting not only efficient operational capabilities but also effective management strategies in adapting to market demands. Given that the CFO is positive this year, we can add 1 point to MLM's Piotroski score.

Return on Assets (ROA) are growing?

The change in Return on Assets (ROA) evaluates if there has been an improvement in a company's efficiency in generating profits with its assets year-over-year.

Historical change in Return on Assets (ROA) of Martin Marietta Materials (MLM)

For Martin Marietta Materials (MLM), the ROA improved from 0.059 in 2022 to 0.0776 in 2023. This 30% increase in ROA is a positive trend, indicating the company has become more efficient in generating profits from its assets. Historically, compared to the industry median ROA of around 0.2979 in 2022, MLM's ROA is relatively low. However, the 2023 improvement reflects potential operational enhancements or favorable market conditions for MLM.

Operating Cashflow are higher than Netincome?

Operating Cash Flow (OCF) refers to the cash generated from the normal operating activities of a company. When OCF is higher than Net Income, it signifies a company's earnings quality, suggesting that earnings are well-supported by cash flow. This scenario indicates lower reliance on accounting adjustments or accruals.

Historical accruals of Martin Marietta Materials (MLM)

In 2023, Martin Marietta Materials (MLM) has an Operating Cash Flow of $1.528 billion compared to a Net Income of $1.168 billion. Thus, the OCF is higher than the Net Income, meeting this criterion with 1 point. This comparison is essential because it indicates strong earnings quality and enhances the reliability of the reported net income. In MLM's case, having consistently growing OCF over the years, peaking at $1.528 billion in 2023, augurs well for the company. The OCF growth dwarfing various phase increments in Net Income, such as $0.937 million in 2003 and $1.168 billion in 2023, showcases solid financial management and operational efficiency advantages accrued over time.

Liquidity of Martin Marietta Materials (MLM)

Leverage is declining?

The Piotroski F-Score considers changes in leverage as it reflects a company’s change in financial risk. A decrease indicates improved financial health.

Historical leverage of Martin Marietta Materials (MLM)

In 2023, Martin Marietta Materials’ leverage has increased to 0.2825 from 0.3119 in 2022. This rise in leverage is unfavorable, contributing 0 points for this criterion. Historically, leverage has fluctuated, peaking at 0.3808 in 2018 and troughing at 0.2063 in 2016, suggesting variable financial strategies and economic conditions.

Current Ratio is growing?

The current ratio measures a company's ability to cover its short-term liabilities with its short-term assets. An increase in the current ratio indicates a stronger liquidity position, which is crucial for avoiding financial difficulties and insolvency.

Historical Current Ratio of Martin Marietta Materials (MLM)

For Martin Marietta Materials (MLM), the current ratio has increased from 1.9901 in 2022 to 3.3489 in 2023. This signifies an improvement in its liquidity position. In comparison, looking at the past 20 years, MLM's current ratio has experienced fluctuations but has generally ranged between 1.2357 and 4.0407, compared to the industry median which ranges between 1.3773 and 1.8776. The 2023 ratio is not only higher than its previous year but also substantially above the industry median of 1.6879. Therefore, MLM earns a point for an increased current ratio in 2023, indicating a positively strong liquidity position that can instill confidence among investors and stakeholders.

Number of shares not diluted?

Shares outstanding reflect the total number of a company's shares currently held by all its shareholders. This metric is important because it represents potential dilution.

Historical outstanding shares of Martin Marietta Materials (MLM)

In 2022, Martin Marietta Materials had outstanding shares of 62,300,000, which decreased to 61,900,000 in 2023. Thus, the outstanding shares decreased by 400,000 over the period. This decrease suggests a reduction in shareholder dilution and earns a point in the Piotroski analysis, reflecting a positive trend.

Operating of Martin Marietta Materials (MLM)

Cross Margin is growing?

Gross Margin is a key metric that indicates the financial health of a company by revealing the portion of revenue that exceeds the cost of goods sold. A higher gross margin signifies that the company retains more money on each dollar of sales for other expenses and potential profit.

Historical gross margin of Martin Marietta Materials (MLM)

Comparing the Gross Margin of Martin Marietta Materials (MLM) between 2022 and 2023, the margin has increased from 0.231 to 0.2984. This improvement can be viewed positively as it indicates more effective cost management and a better ability to retain revenue from sales. This is significant in such a capital-intensive industry, reflecting MLM's operational efficiency. Over the last 20 years, MLM has generally shown increasing gross margins except for a few dips, with the recent 2023 value outperforming the industry median of 0.3214, which is a strong indicator of MLM's robust market position. Hence, 1 point is awarded for this criterion.

Asset Turnover Ratio is growing?

Change in Asset Turnover Ratio. This ratio measures the efficiency of a company in generating sales from its assets. An increase generally signifies better usage of the company's assets.

Historical asset turnover ratio of Martin Marietta Materials (MLM)

The Asset Turnover Ratio for Martin Marietta Materials (MLM) increased from 0.4193 in 2022 to 0.45 in 2023. By Piotroski criteria, this increase assigns a score of 1 point. Over a span of 20 years, MLM's asset turnover ratio has shown varying trends, peaking at 0.8933 in 2006. The latest increase in 2023, although moderate, signals improvement in using its assets to generate sales compared to 2022. The steady upward movement from 2022 is favorable for the company, reflecting better efficiency.


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