Martin Marietta Materials, Inc.MLMNYSE

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Hold

Fair Value: $616.70 per share(market-calibrated)

-7.3%

Upside to Fair Value

Current

$665.35

Pure Model

$610.77

Fair Value

$616.70

Bull Case

$759.83

Bear Case

$477.54

Market Reality Check

Model Terminal Growth

2.25%

Market-Implied Growth

3.51%

Calibrated Growth

2.44%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $610.77.

What's Driving This Ratingfor MLM

↓

CapEx normalizing toward maintenance

Historical CapEx is 9.83% of revenue (heavy investment phase). Model fades this to 4.00% by Year 10, freeing up ~$575M in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 38.38% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects 6.67% revenue growth, fading to 2.25% by Year 10. Revenue reaches $9.9B (vs $6.5B today).

🎯

Market pricing in higher long-term growth

To justify $665.35, the market implies 3.51% perpetual growth — 126bps above the model's 2.25%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 74.04% indicates efficient cash generation. FCF reaches $3.4B by Year 10 (34.45% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.14

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)9.63%

Cost of Debt

Pre-tax Cost of Debt3.29%

Tax Rate19.41%

After-tax Cost of Debt2.65%

Equity Weight (E/V)88.29%

Debt Weight (D/V)11.71%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (88.29% × 9.63%) + (11.71% × 2.65%)

= 8.82%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$7.0B	$8.2B	$8.8B	$9.2B	$9.9B
EBIT	$2.7B	$3.1B	$3.4B	$3.5B	$3.8B
Tax	$520M	$609M	$658M	$688M	$735M
NOPAT	$2.2B	$2.5B	$2.7B	$2.9B	$3.1B
+ Depreciation	$568M	$665M	$719M	$751M	$803M
- Capex	$686M	$697M	$639M	$549M	$395M
- Δ NWC	$124M	$195M	$55M	$58M	$62M
Free Cash Flow	$1.9B	$2.3B	$2.8B	$3.0B	$3.4B
Discount Factor	0.919	0.776	0.655	0.554	0.430
Present Value	$1.8B	$1.8B	$1.8B	$1.7B	$1.5B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$3.4B

Terminal Growth Rate2.25%

WACC8.82%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$52.9B

PV of Terminal Value$22.7B

Exit Multiple Method

Year 10 EBITDA$4.6B

Exit Multiple (EV/EBITDA)14.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$64.3B

PV of Terminal Value$27.6B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$16.9B

PV of Terminal Value$22.7B

Enterprise Value$39.6B

(-) Net Debt$5.3B

Equity Value$34.4B

Shares Outstanding60M

Price per Share$570.38

Exit Multiple Method

PV of Projected FCFs$16.9B

PV of Terminal Value$27.6B

Enterprise Value$44.5B

(-) Net Debt$5.3B

Equity Value$39.3B

Shares Outstanding60M

Price per Share$651.16

Pure Model Fair Value

$610.77

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.25%	1.75%	2.25%	2.75%	3.25%
6.82%	$763.55	$791.16	$824.81	$866.73	$920.41
7.82%	$663.35	$681.32	$702.52	$727.90	$758.85
8.82%	$584.25	$596.57	$610.77	$627.31	$646.81
9.82%	$519.57	$528.35	$538.29	$549.64	$562.72
10.82%	$465.35	$471.79	$478.99	$487.08	$496.24

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$477.54

-28.2% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.43

Base Case

$610.77

-8.2% vs current

• Analyst consensus
• Terminal growth: 2.3%
• Beta: 1.14

Bull Case

$759.83

14.2% vs current

• +25% vs analyst consensus
• Terminal growth: 2.8%
• Beta: 0.97

Key Assumptions & Drivers• Basic Materials Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth6.67%

Year 3 Revenue Growth9.16%

Year 5 Revenue Growth2.25%

Year 7 Revenue Growth2.25%

Year 10 Revenue Growth2.25%

Terminal Growth Rate2.25%

Margin & Efficiency

Current EBIT Margin38.38%

Tax Rate19.41%

Historical Capex / Rev9.83%

Terminal Capex / Rev4.00%

NWC / Revenue28.48%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 14x EV/EBITDA (Basic Materials sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

Explore More

S&P 500 Screener

Filter and sort all 500 stocks

Market Movers

Today's biggest gainers and losers

Market Heatmap

Visual sector performance