Critical Contrast: Vulcan Materials (VMC) and Summit Materials (SUM)
Vulcan Materials (NYSE: VMC) and Summit Materials (NYSE:SUM) are both mid-cap construction companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, valuation, earnings, profitability, analyst recommendations, dividends and institutional ownership.
Insider and Institutional Ownership
84.9% of Vulcan Materials shares are held by institutional investors. 0.9% of Vulcan Materials shares are held by company insiders. Comparatively, 2.0% of Summit Materials shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
This table compares Vulcan Materials and Summit Materials’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Earnings & Valuation
This table compares Vulcan Materials and Summit Materials’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Vulcan Materials||$3.70 billion||4.12||$940.88 million||$3.09||37.27|
|Summit Materials||$1.76 billion||1.74||$368.45 million||$0.56||50.70|
Vulcan Materials has higher revenue and earnings than Summit Materials. Vulcan Materials is trading at a lower price-to-earnings ratio than Summit Materials, indicating that it is currently the more affordable of the two stocks.
Vulcan Materials pays an annual dividend of $1.00 per share and has a dividend yield of 0.9%. Summit Materials does not pay a dividend. Vulcan Materials pays out 32.4% of its earnings in the form of a dividend. Vulcan Materials has raised its dividend for 3 consecutive years.
Volatility and Risk
Vulcan Materials has a beta of 0.93, indicating that its stock price is 7% less volatile than the S&P 500. Comparatively, Summit Materials has a beta of 2.06, indicating that its stock price is 106% more volatile than the S&P 500.
This is a breakdown of recent ratings and recommmendations for Vulcan Materials and Summit Materials, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Vulcan Materials presently has a consensus target price of $138.60, indicating a potential upside of 20.34%. Summit Materials has a consensus target price of $30.33, indicating a potential upside of 6.32%. Given Vulcan Materials’ higher possible upside, analysts clearly believe Vulcan Materials is more favorable than Summit Materials.
Vulcan Materials beats Summit Materials on 11 of the 17 factors compared between the two stocks.
About Vulcan Materials
Vulcan Materials Company is a supplier of construction aggregates (primarily crushed stone, sand and gravel) and a producer of asphalt mix and ready-mixed concrete. The Company operates through four segments: Aggregates, Asphalt Mix, Concrete and Calcium. The Aggregates segment produces and sells aggregates (crushed stone, sand and gravel, sand, and other aggregates) and related products and services (transportation and other). The Company produces and sells asphalt mix in Arizona, California, New Mexico and Texas. The Company produces and sells ready-mixed concrete in Georgia, Maryland, New Mexico, Texas, Virginia, Washington District of Columbia and the Bahamas. The Calcium segment consists of a Florida facility that mines, produces and sells calcium products. As of December 31, 2016, it had 337 active aggregates facilities. The Company sells aggregates that are used as ballast for construction and maintenance of railroad tracks.
About Summit Materials
Summit Materials, Inc. is a construction materials company. The Company operates through three segments: West, East and Cement. As of December 31, 2016, the Company had operations in 21 states in the United States and in British Columbia, Canada. The Company’s materials include aggregates, which it supplies across the United States, and in British Columbia, Canada, and cement, which it supplies along the Mississippi River from Minneapolis to New Orleans. Within its markets, it offers construction materials and related downstream products through its vertical integration. In addition to supplying of aggregates to its customers, the Company also uses its materials internally to produce ready-mix concrete and asphalt paving mix. Its construction materials operations consists of aggregates production, including crushed stone and construction sand and gravel, cement and ready-mixed concrete production, and asphalt paving mix production.
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