Vulcan Materials (NYSE:VMC) vs. Monarch Cement (OTCMKTS:MCEM) Critical Review

Monarch Cement (OTCMKTS:MCEM) and Vulcan Materials (NYSE:VMC) are both construction companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, institutional ownership, dividends, analyst recommendations, risk and earnings.

Analyst Recommendations

This is a summary of current ratings and target prices for Monarch Cement and Vulcan Materials, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Monarch Cement	0	0	0	0	0.00
Vulcan Materials	0	2	10	2	3.00

Vulcan Materials has a consensus target price of $302.91, suggesting a potential upside of 17.03%. Given Vulcan Materials’ stronger consensus rating and higher probable upside, analysts clearly believe Vulcan Materials is more favorable than Monarch Cement.

Valuation & Earnings

This table compares Monarch Cement and Vulcan Materials”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Monarch Cement	$268.05 million	3.28	$66.05 million	$14.22	16.88
Vulcan Materials	$7.42 billion	4.61	$911.90 million	$7.05	36.71

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Monarch Cement	20.30%	13.45%	11.93%
Vulcan Materials	12.50%	12.91%	6.61%

Dividends

Monarch Cement pays an annual dividend of $3.32 per share and has a dividend yield of 1.4%. Vulcan Materials pays an annual dividend of $1.96 per share and has a dividend yield of 0.8%. Monarch Cement pays out 23.3% of its earnings in the form of a dividend. Vulcan Materials pays out 27.8% 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. Monarch Cement is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

90.4% of Vulcan Materials shares are owned by institutional investors. 26.0% of Monarch Cement shares are owned by insiders. Comparatively, 0.6% of Vulcan Materials shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk & Volatility

Monarch Cement has a beta of 0.6, suggesting that its stock price is 40% less volatile than the S&P 500. Comparatively, Vulcan Materials has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500.

Summary

Vulcan Materials beats Monarch Cement on 11 of the 18 factors compared between the two stocks.

About Monarch Cement

The Monarch Cement Company engages in the manufacture and sale of portland cement in the United States. The company also provides masonry cement, ready-mixed concrete, concrete products, and sundry building materials. It primarily serves contractors, ready-mixed concrete plants, concrete products plants, building materials dealers, and governmental agencies. The company sells its products principally in the State of Kansas, the State of Iowa, southeast Nebraska, western Missouri, northwest Arkansas, and northern Oklahoma. The Monarch Cement Company was founded in 1908 and is based in Humboldt, Kansas.

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.