U.S. Silica (SLCA) and Martin Marietta Materials (MLM) Critical Analysis

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U.S. Silica (NYSE: MLM) and Martin Marietta Materials (NYSE:MLM) are both basic materials companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, profitability, institutional ownership, risk, earnings, dividends and analyst recommendations.

Dividends

U.S. Silica pays an annual dividend of $0.25 per share and has a dividend yield of 1.3%. Martin Marietta Materials pays an annual dividend of $1.92 per share and has a dividend yield of 1.0%. U.S. Silica pays out 16.7% of its earnings in the form of a dividend. Martin Marietta Materials pays out 26.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. U.S. Silica is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for U.S. Silica and Martin Marietta Materials, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
U.S. Silica 1 7 11 0 2.53
Martin Marietta Materials 0 3 6 0 2.67

U.S. Silica currently has a consensus price target of $36.71, suggesting a potential upside of 88.91%. Martin Marietta Materials has a consensus price target of $239.13, suggesting a potential upside of 20.59%. Given U.S. Silica’s higher probable upside, equities analysts clearly believe U.S. Silica is more favorable than Martin Marietta Materials.

Profitability

This table compares U.S. Silica and Martin Marietta Materials’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
U.S. Silica 10.79% 13.14% 7.06%
Martin Marietta Materials 17.82% 10.52% 5.56%

Institutional and Insider Ownership

99.2% of U.S. Silica shares are held by institutional investors. 1.4% of U.S. Silica shares are held by company insiders. Comparatively, 0.8% of Martin Marietta Materials shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares U.S. Silica and Martin Marietta Materials’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
U.S. Silica $1.24 billion 1.21 $145.20 million $1.50 12.95
Martin Marietta Materials $3.97 billion 3.15 $713.34 million $7.18 27.62

Martin Marietta Materials has higher revenue and earnings than U.S. Silica. U.S. Silica is trading at a lower price-to-earnings ratio than Martin Marietta Materials, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

U.S. Silica has a beta of 2.15, suggesting that its stock price is 115% more volatile than the S&P 500. Comparatively, Martin Marietta Materials has a beta of 1.06, suggesting that its stock price is 6% more volatile than the S&P 500.

Summary

U.S. Silica beats Martin Marietta Materials on 9 of the 16 factors compared between the two stocks.

About U.S. Silica

U.S. Silica Holdings, Inc. produces and sells commercial silica in the United States. The company operates through two segments, Oil & Gas Proppants and Industrial & Specialty Products. It offers whole grain commercial silica products to be used as fracturing sand in connection with oil and natural gas recovery; and resin coated proppants, as well as sells its whole grain silica products in various size distributions, grain shapes, and chemical purity levels for manufacturing glass products. The company also provides ground commercial silica products for use in plastics, rubber, polishes, cleansers, paints, glazes, textile fiberglass, and precision castings; and fine ground silica for use in premium paints, specialty coatings, sealants, silicone rubber, and epoxies. In addition, it offers other industrial mineral products, such as aplite, a mineral used to produce container glass and insulation fiberglass; adsorbent made from a mixture of silica and magnesium for preparative and analytical chromatography applications; and White Armor, a product line of cool roof granules used in industrial roofing applications. U.S. Silica Holdings, Inc. serves oilfield services companies, and exploration and production companies that are engaged in hydraulic fracturing; and industrial and specialty products end markets. The company was formerly known as GGC USS Holdings, Inc. U.S. Silica Holdings, Inc. was incorporated in 2008 and is headquartered in Frederick, Maryland.

About Martin Marietta Materials

Martin Marietta Materials, Inc., a natural-resource-based building materials company, supplies aggregates and heavy building materials to the construction industry in the United States and internationally. The company provides crushed stone, sand, and gravel products; ready mixed concrete, and asphalt and paving products; and Portland and specialty cement for use in the infrastructure projects, and nonresidential and residential construction markets, as well as in the railroad, agricultural, utility, and environmental industries. It also manufactures and markets magnesia-based chemical products for the industrial, agricultural, and environmental applications; and dolomitic lime primarily for customers in the steel and mining industries, as well as provides road paving construction services. The company's chemical products are used in flame retardants, wastewater treatment, pulp and paper production, and other environmental applications. Martin Marietta Materials, Inc. was founded in 1993 and is headquartered in Raleigh, North Carolina.

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