Contrasting Vulcan Materials (NYSE:VMC) & Eagle Materials (NYSE:EXP)

Eagle Materials (NYSE:EXP) and Vulcan Materials (NYSE:VMC) are both materials companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, dividends, profitability, earnings, analyst recommendations, institutional ownership and valuation.

Volatility and Risk

Eagle Materials has a beta of 1.33, indicating that its stock price is 33% more volatile than the S&P 500. Comparatively, Vulcan Materials has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500.

Dividends

Eagle Materials pays an annual dividend of $1.00 per share and has a dividend yield of 0.5%. Vulcan Materials pays an annual dividend of $2.08 per share and has a dividend yield of 0.7%. Eagle Materials pays out 7.9% of its earnings in the form of a dividend. Vulcan Materials pays out 24.6% 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. Vulcan Materials has raised its dividend for 12 consecutive years. Vulcan Materials is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Eagle Materials and Vulcan Materials’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Eagle Materials	17.32%	26.87%	10.73%
Vulcan Materials	13.77%	13.03%	6.65%

Earnings and Valuation

This table compares Eagle Materials and Vulcan Materials”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eagle Materials	$2.31 billion	2.44	$423.81 million	$12.65	14.53
Vulcan Materials	$7.94 billion	4.59	$1.08 billion	$8.45	33.32

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

Institutional and Insider Ownership

96.1% of Eagle Materials shares are held by institutional investors. Comparatively, 90.4% of Vulcan Materials shares are held by institutional investors. 1.7% of Eagle Materials shares are held by company insiders. Comparatively, 0.7% of Vulcan Materials shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and price targets for Eagle Materials and Vulcan Materials, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eagle Materials	1	10	0	0	1.91
Vulcan Materials	1	9	12	0	2.50

Eagle Materials presently has a consensus target price of $195.22, suggesting a potential upside of 6.24%. Vulcan Materials has a consensus target price of $308.78, suggesting a potential upside of 9.66%. Given Vulcan Materials’ stronger consensus rating and higher probable upside, analysts plainly believe Vulcan Materials is more favorable than Eagle Materials.

Summary

Vulcan Materials beats Eagle Materials on 9 of the 17 factors compared between the two stocks.

About Eagle Materials

Eagle Materials Inc., through its subsidiaries, manufactures and sells heavy construction materials and light building materials in the United States. It operates in four segments: Cement, Concrete and Aggregates, Gypsum Wallboard, and Recycled Paperboard. The company engages in the mining of limestone for the manufacture, production, distribution, and sale of Portland cement, including Portland limestone cement; grinding and sale of slag; and mining of gypsum for the manufacture and sale of gypsum wallboards used to finish the interior walls and ceilings in residential, commercial, and industrial structures, as well as well as containerboard and lightweight packaging grades; manufacture and sale of recycled paperboard to the gypsum wallboard industry and other paperboard converters; the sale of readymix concrete; and mining and sale of aggregates, such as crushed stone, sand, and gravel. Its products are used in commercial and residential construction; public construction projects to build, expand, and repair roads and highways; and repair and remodel activities. The company was formerly known as Centex Construction Products, Inc. and changed its name to Eagle Materials, Inc. in January 2004. Eagle Materials Inc. was founded in 1963 and is headquartered in Dallas, Texas.

About Vulcan Materials

Vulcan Materials Company, together with its subsidiaries, produces and supplies construction aggregates primarily in the United States. It operates through four segments: Aggregates, Asphalt, Concrete, and Calcium. The company provides crushed stones, sand and gravel, sand, and other aggregates; and related products and services that are applied in construction and maintenance of highways, streets, and other public works, as well as in the construction of housing and commercial, industrial, and other nonresidential facilities. It also offers asphalt mix and asphalt construction paving services; ready-mixed concrete; and calcium products for the animal feed, plastics, and water treatment industries. The company was formerly known as Virginia Holdco, Inc. and changed its name to Vulcan Materials Company. Vulcan Materials Company was founded in 1909 and is headquartered in Birmingham, Alabama.