Martin Marietta Materials (Martin Marietta Materials) Predictability Rank

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What is Martin Marietta Materials Predictability Rank?

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

Martin Marietta Materials Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

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Martin Marietta Materials (Martin Marietta Materials) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Basic Materials » Building Materials » Martin Marietta Materials Inc (NYSE:MLM) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

MLM:Mexico MMX:Germany M1LM34:Brazil

Address

4123 Parklake Avenue, Raleigh, NC, USA, 27612

Website

https://www.martinmarietta.com

Martin Marietta Materials is one of the United States' largest producer of construction aggregates (crushed stone, sand, and gravel). In 2022, Martin Marietta sold 207 million tons of aggregates. Martin Marietta's most important markets include Texas, Colorado, North Carolina, Georgia, and Florida, accounting for most of its sales. The company also produces cement in Texas and uses its aggregates in its asphalt and ready-mixed concrete businesses. Martin's magnesia specialties business produces magnesia-based chemical products and dolomitic lime.

Executives

Craig M Latorre	officer: Sr. VP, CHRO	2710 WYCLIFF ROAD, RALEIGH NC 27607
Kelly Gean Bennett	officer: Sr VP, Human Resources	4123 PARKLAKE AVENUE, RALEIGH NC 27612
Sue W Cole	director	C/O US TRUST CO OF NORTH CAROLINA, 301 N. ELM ST., GREENSBORO NC 27401
Oliver W Brooks	officer: SVP - Enterprise Excellence	4123 PARKLAKE AVENUE, RALEIGH NC 27612
John P Mohr	officer: SVP - CIO	2710 WYCLIFF ROAD, RALEIGH NC 27607
Michael J Petro	officer: SVP - Strategy and Development	4123 PARKLAKE AVENUE, RALEIGH NC 27612
C Howard Nye	officer: Pres & Chief Operating Officer	2710 WYCLIFF ROAD, RALEIGH NC 27607
Roselyn R Bar	officer: VP, Gen. Counsel and Secy	C/O MARTIN MARIETTA MATERIALS INC, 2710 WYCLIFF ROAD, RALEIGH NC 27607
Anthony R Foxx	director	2710 WYCLIFF ROAD, RALEIGH NC 27607
Zelnak Stephen P Jr	director, officer: Chairman, President and CEO	MARTIN MARIETTA MATERIALS INC, 2710 WYCLIFF ROAD, RALEIGH NC 27607
David C Wajsgras	director	870 WINTER STREET, WALTHAM MA 02451
John J Koraleski	director	MARTIN MARIETTA, 2710 WYCLIFF ROAD, RALEIGH NC 27607
Daniel L. Grant	officer: SVP - Strategy and Development	2710 WYCLIFF ROAD, RALEIGH NC 27607
Thomas Pike	director	C/O ACCENTURE, 161 N. CLARK STREET, 23RD FLOOR, CHICAGO IL 60601
Laree E Perez	director	1111 LOUISIANA STREET, HOUSTON TX 77002