Vulcan Materials

IThe business

Vulcan digs rock and sells it. The product is crushed stone, sand and gravel, which the 10-K calls aggregates. It goes under roads, into asphalt and concrete, around pipes and foundations, and into almost anything built outdoors.⁴ In 2025 the company ran 425 active aggregates facilities, 71 asphalt plants and 76 concrete plants, and sold to more than 25,000 customers. Its five largest customers made up about 7% of revenue and none more than 2%.⁴ Its home is Birmingham, Alabama, but the money is elsewhere: California, Texas, Georgia, Tennessee and Virginia are the top five states and together brought in 63% of 2025 revenue, and the top ten brought in 90%.⁴

The profit is in the stone. In 2025 the Aggregates segment earned $1,964.8M of gross profit out of a total of $2,174.6M, which is 90% C (calculated). Asphalt earned $173.9M and concrete $35.9M.⁴ Management calls the company “aggregates-led,” and it is acting on that: it sold its Houston asphalt and construction business in the fourth quarter of 2025, its California ready-mixed concrete business in June 2026, and its aggregates and concrete operations in the US Virgin Islands, for $722.1M in all, of which $150.0M is due in December 2027.⁴¹⁰¹¹

The economics of one ton

Think about one ton. In 2025 Vulcan sold it, after taking out the freight it passes through, for $21.98. The cash cost of producing and delivering it was $10.65, which left $11.33 of cash gross profit. Depreciation, depletion and accretion took $2.67 of that, so gross profit was $8.66 a ton.⁴ That is the number the whole company is run on, and the proxy ties pay to it.⁷

Two features of that ton matter. First, most of the cost is the cost of a quarry running, not of the rock: wages, parts, diesel, electricity, repairs and contractors. When volume falls, those costs do not fall with it. Second, the price is set locally. Aggregates are heavy, so “in most cases” they are produced near where they are used, and the 10-K says about 80% of shipments go from the quarry to the customer by truck alone.⁴ A truck carries 20 to 25 tons. A barge carries 65 truckloads and one of the company’s ocean ships 2,500.⁴ Where there is no good local stone, such as the Gulf Coast and the Eastern Seaboard, Vulcan moves it by ship, barge and rail, and it serves California and Hawaii from a quarry in British Columbia.⁴

What drives volume

Demand follows building. The company says that 40% to 55% of aggregates shipments have historically gone into public work, such as highways, airports and government buildings, and in 2024 about 60% went to private work, meaning homes and commercial buildings.⁴¹² Public work is steadier and uses more stone per dollar. Private building follows interest rates and the economy, and has swung much more.⁴ US housing starts were about 1.5 million in 2025, against a peak above 2 million in 2006 and a trough below 0.6 million in 2009.⁴

Nine years of volume show what that means. Shipments went from 181.4M tons in 2016 to a high of 236.3M in 2022, fell to 219.9M in 2024, and were 226.8M in 2025.⁶⁵¹²⁴ In 2026 the company guided to 1% to 3% growth and has delivered 1% in nine months, with a 3% fall in the third quarter, which it puts down to a tough comparison with the third quarter of 2025, when the weather was good after a wet first half.⁴³

Weather and the calendar

Almost everything Vulcan sells is produced and used outdoors. The third quarter is usually the busiest and the first the slowest, and the 10-K says no quarter predicts a year.⁴ In 2025 the first half was slowed by severe winter weather and rain.³ In 2026 the second quarter lost shipments in Texas and parts of the Southeast to heavy rain in May and June.¹⁰ A wet month can move a quarter’s volume by several percent, and most of it comes back, but not all of it. That is why I look at a year or more of tons and not a quarter.

Where it is going

The company’s case for growth is about places. It cites Woods & Poole Economics, a forecaster, projecting that 76% of US population growth from 2025 to 2035 will fall in states where Vulcan operates, with 75% of the new jobs and 73% of the new households, and says it serves 34 of the 50 fastest-growing metropolitan areas.⁴ I think it is a fair claim, and it is a forecast. It is also what every producer in the Sun Belt would say.

The other growth path is buying. The 10-K says that over ten years Vulcan completed more than 30 acquisitions, including more than 75 quarries and sales yards in its top ten states.⁴ In 2026 it has bought aggregates operations in Colorado, Texas, Kentucky and Tennessee, and asphalt operations in California, for $290.6M in cash, and the company says two bolt-ons in the third quarter enhance its position in Tennessee and extend it into southern Ohio.¹¹ Section IV looks at what these deals have earned.

IIThe moat

The protection here is geography and permission. A quarry is a hole that took years to approve, next to a city that grew up around it. A rival who wants to supply that city must find stone, win zoning and permits, and then make a profit selling at a price the existing quarry can match. Vulcan holds 16.6B tons of proven and probable reserves, which is about 73 years at the 2025 shipment rate C (calculated).⁴ The 10-K calls the barriers “significant” in many cities and says they raise the value of the reserves it already has.⁴

The reserves are real, but they are less pure than the number suggests. Of the 16.6B tons, 407.6M are at the Calica quarry in Mexico and 63.3M at Puerto Cortés in Honduras. Production and sales at both are halted.⁴ That is 2.8% of the total, and I count none of it in my valuation. In 2022 Mexican officials ordered Calica’s quarrying to stop, and in September 2024 a presidential decree made the entire property a protected natural area.⁴¹¹ On 27 July 2026 the tribunal in Vulcan’s NAFTA case found that Mexico had broken the treaty in several ways, but the damages it awarded were, in the company’s word, negligible. In October Vulcan began a second case under the Netherlands treaty.¹⁴¹¹ I cannot judge the legal outcome. I can say what it teaches: the barrier that keeps rivals out can also be switched on against you, and a regulator’s “no” to an expansion is as powerful as a regulator’s “no” to a rival.

What the evidence says

Price is the test of a barrier. Over the nine years to 2025 Vulcan’s freight-adjusted price per ton rose 6.3% a year, from $12.65 to $21.98, and unit cash cost rose 5.6% a year C (calculated).⁶⁴ The gap widened, but the pace was uneven. From 2016 to 2021 the price rose 3.3% a year. From 2021 to 2024 it rose 12.3% a year, as inflation arrived: 10.3% in 2022, then 16% in 2023, then 10.8% in 2024.⁵¹²⁴ Unit cash cost rose 12.1% a year over the same three years C (calculated). In 2025 price rose 4.3% and cost 1.7% C (calculated), and in 2026 the third quarter brought 3.7% and 7%.⁴³

I read that as two different things. The first is a business that raises price faster than inflation in ordinary times: 3% a year to 2021 on the 10-K’s figures, a little above what costs did. The second is a once-in-a-generation catch-up, when everyone raised prices and the customers accepted it. The second is the reason the last five years look so good, and I would not extrapolate it. A local barrier does let a company pass cost increases on. But the record is a mix of the two, and what the share price needs depends on which one is repeated.

Local power is not the same as national power. Vulcan’s own 10-K names seven other listed producers among the ten largest, Arcosa, Amrize, Cemex, CRH, Heidelberg Materials, Knife River and Martin Marietta.⁴ On 4 November Martin Marietta reported a third-quarter selling price of $22.41 a ton, 4% lower than a year earlier because of acquired mix, though 1.0% higher on its existing quarries, and said it expects mid- to high-single-digit pricing in 2027.¹⁵ Vulcan says the same of its own 2027.³ I take that as consistent evidence that the industry thinks it can still raise price, and not as proof that it can.

IIIThe competitive advantage

The protection in Section II is the same for every owner of a good quarry. What sets Vulcan apart from them is how it runs the thing. The company’s answer is a pair of disciplines it calls the Vulcan Way of Selling and the Vulcan Way of Operating.⁴ Selling means each market is managed for price with real-time data, defined roles, and logistics that bundle delivery. Operating means production, parts and supplies are managed for cost, with the savings shared across 425 sites. The 10-K says the company’s logistics team handles the shipment of nearly half its products.⁴

I have no inside view of how well either works. I can see the output. Cash gross profit per ton rose from $6.12 in 2016 to $11.33 in 2025, 7.1% a year, and it has risen in each year but one.⁶⁴ Gross profit per ton went from $5.96 in 2022 to $8.66, up 45% in three years C (calculated).⁵⁴ Selling and administrative cost fell to 6.9% of revenue on a twelve-month basis, 30 basis points below a year earlier.³ And in the third quarter of 2026, with price up 4% and unit cash cost up 7%, cash gross profit per ton still edged up from $11.84 to $11.95.³ That is a company with some control over what it can pass on.

The part I cannot see

The per-ton figure hides a shift in mix. A ton that is sold close to a city in a growing market earns more than a ton that comes off a barge. As Vulcan buys in new places or sells weaker assets, the average moves without any change in how it runs. In 2025 the company sold Houston asphalt and in 2026 California concrete. Neither changes the aggregates figure, but acquisitions of aggregates would. The company also reports a mix-adjusted price: 4.7% in the third quarter against 3.7% reported.¹¹ So some of the reported rise comes from selling a different mix of stone. I find the mix-adjusted figure the better guide to local pricing, and I use the reported one in my model because it is what pays the bills.

The table does not prove an advantage, but it puts a number on how the market values it. Martin Marietta looks dearer on the guide, partly because the guide holds only part of a year of what it bought. Vulcan, with no large deal this year, trades at 17.8 times, a high multiple for a company whose Adjusted EBITDA has not fallen in any of the last ten years, and whose volumes have. I do not have a better comparison.

IVManagement

Vulcan changed chief executives on 1 January 2026. Ronnie Pruitt, who joined with the 2021 U.S. Concrete deal and had been chief operating officer, took over from Tom Hill, who had been chief executive since July 2014 and stays as executive chairman.⁷ The proxy describes a multi-year succession plan.⁷ All directors but those two are independent.⁷ The company has had one more change this autumn: David Clement, head of operations support and procurement, said on 19 October that he will retire in the first quarter of 2027.¹⁸ The company reported a mine-safety order at its Lexington quarry in California on 27 October, an imminent-danger order issued after workers were exposed to fall hazards during maintenance. No one was hurt and the company fixed it at once.¹⁹ I note it because safety is part of the bonus. Vulcan’s 2025 injury rate was 0.9 per 200,000 hours against an industry rate of 1.8 in 2024.⁴

How they are paid, and what that pays them to do

Tom Hill’s reported pay for 2025 was $14.7M, Tom Baker’s $8.4M, Ronnie Pruitt’s $5.2M as chief operating officer. The CEO’s pay was 127 times the median employee’s $115,931.⁷ There are three parts. Salary is about the market median. The cash bonus is set on EBITDA economic profit, which is Adjusted EBITDA less a charge for the capital used, at the company’s cost of capital, plus a safety modifier of up to 20 points.⁷ For 2025 the CEO’s target was 160% of salary and he was paid $3.04M against a target of $1.98M, or 154% C (calculated).⁷

That formula is better than most. It charges managers for capital. Its weak side is the starting point: Adjusted EBITDA is before depreciation, so the cost of wearing out a quarry never reaches the bonus except through the capital charge on book assets, which falls as the assets are depreciated.⁷ I cannot tell from the proxy how large the charge is. The proxy gives the method, not the rate.

The stock award is the larger piece. Performance units are 60% of the long-term award. Half of them pay on three-year total return against the S&P 500, and half on the growth in aggregates cash gross profit per ton: that half pays 12.5% at growth of 0.5% a year, 50% at 4.5% and 100% at 9.5%, and nothing below 0.5%.⁷ The units issued in 2022 paid 180.1% of target.⁷ So the plan pays managers, in stock, to raise the price of a ton faster than its cost. It is aimed at the right number. It is also a number that can be raised with price alone, and the price rises of 2022 to 2024 helped the 2022 grant to pay 180.1%. What it does not pay for is volume, a good return on a deal, or owner cash.

How much of their own money is in

The directors and officers together own 671,945 shares, or 0.65% of the company, worth about $200M at the close C (calculated).⁷ Tom Hill holds 41,044 shares and 141,404 exercisable stock-only appreciation rights, Tom Baker 62,781 shares, Ronnie Pruitt 20,916 shares and 11,301 rights.⁷ At the close Pruitt’s shares are worth about $6.2M C (calculated), which is more than the 7 times salary, about $5.6M, that his guideline requires. Hill’s guideline is 2 times, and all officers meet theirs. Hedging and pledging are banned, and officers must keep half of the net shares they receive until they meet the guideline.⁷

The largest holders are not insiders. State Farm owns 8.2% and Vanguard 12.6%, BlackRock 6.8%, Principal 5.2% and JPMorgan 5.1%, all from filings dated 2024 and 2025 that may have moved.⁷ I read that as a register full of long-term holders and index funds, and no one who dictates strategy. I did not review Forms 4 for insider buying or selling, so I make no claim about it.

One thing to read with care. In 2025 Vulcan paid $11.3M in rent and royalties to Florida Rock Properties, whose parent, FRP Holdings, has Tom Baker as a significant shareholder.⁷ It is disclosed in the proxy and the amount is 0.5% of gross profit C (calculated). But it is money from the company to an executive’s company, and it is the sort of item an owner will want to know about.

What they did with capital over a full cycle

The ten years show a company that earns a good deal of cash and spends more than it earns. From 2016 to 2025 owner cash after all capital and stock pay was $5.5B. Acquisitions took $5.9B, dividends $1.9B and buybacks $1.1B, for $8.9B, and the gap was met by $2.4B of added debt and a small fall in cash C (calculated).⁸⁴ In those years Adjusted EBITDA rose from $966M to $2,324M. I cannot say how much of that came from the deals and how much from price on the old quarries, and neither does the company.

The ROIC the company reports was 15.9% for the twelve months to September.³ That figure is Adjusted EBITDA over invested capital, before depreciation and tax, as the release says. On the same $14.6B of average invested capital, operating earnings after a 23% tax come to about $1,251M, or 8.6% C (calculated). That is a little under the 9.0% I ask of the shares, and it is not quite fair, because old quarries sit on the books at old costs and new deals at today’s. But it is what a buyer of the whole business at book value would earn, and it is the figure that the deals of 2017, 2021 and 2024 are measured against. The record leaves me in two minds: the 2017 deal worked, the concrete deals did not, and the 2024 deals are not yet settled.

I cannot judge the part of the cycle I have not read. The last full cycle includes the 2007 purchase of Florida Rock Industries, near the top of the housing market.⁴ I have not studied the filings of 2008 to 2013, so I give no view of how that cycle went.

VFinancials

Ten years of Vulcan show a steady rise in profit per ton and a flat line in tons. Revenue has compounded at 9.2% a year since 2016, Adjusted EBITDA at 10.2% and diluted EPS at 11.3% C (calculated).⁸⁶⁴ That is faster than the 2.5% growth in tons, because price rose faster than cost. It also helped that the share count fell a little, from 135.8M to 132.7M.⁸

The second chart is the one I would show a friend. Revenue grew 2.2 times and Adjusted EBITDA 2.4 times in nine years, but most of the gain came in two stretches: 2018 and 2019, on shipments and the Aggregates USA deal, and since 2021, on price and the U.S. Concrete deal. Operating margin was 18.5% in 2016 and 20.4% in 2025 C (calculated), a rise of two points; Adjusted EBITDA margin rose from 26.9% to 29.3% C (calculated). The profit pool per ton grew a lot. The profit as a share of each revenue dollar did not grow nearly as much, because much of the revenue is freight and downstream product, passed through at low margin.

What an owner could really take out

The short version is that Vulcan earns about what it reports, once all the capital is paid for, and less than the headline measures suggest. In 2025 it earned $1,076.7M, and operating cash flow less all capital spending and stock pay was $1,072.2M, almost the same C (calculated). Across ten years the two diverge: net earnings of $6.9B against owner cash of $5.5B, or 79% C (calculated). The difference is capital spending above depreciation, mostly in 2017, 2018, 2022 and 2023, and working capital.

For 2026 I build the number from the company’s own guide. Adjusted EBITDA I put at $2.34B, a little under the $2.4B the company projects, and I explain the gap below. Take off the $320M of income tax and $215M of interest the company projects, and the $750M to $800M of capital spending, taken at $775M: about $1.0B is left E (estimate).³⁴ That is $7.99 a share, or 2.7% of the market value. It is 8% under the projected net earnings of $1,120M C (calculated). Most of that gap is the amount by which capital spending exceeds depreciation of $710M.³

Now the central question. How much of the $775M is the cost of staying in place? The company does not say. It describes its first priority as keeping operations in good working order, and says that in 2025 it spent $702.9M of capital to replace or improve existing plant.⁴ That is not a clean split. The one split I found was for 2019, when it spent $404.3M, of which $239.3M, or 59%, was “core operating and maintenance capital” and $165.0M went to growth projects.¹³ Three ways to estimate 2026:

• Scale the 2019 ratio. That year’s maintenance spending was $1.11 a ton. Unit cash cost has risen from $7.25 to $11.31, or 56%, so $1.73 a ton, or about $395M E (estimate).
• Use depreciation of plant and equipment. In 2025 depreciation was $544.6M, with another $86.1M of depletion and $20.7M of accretion.⁴ Taking depreciation alone gives about $550M. That is the one I use, and it is probably on the low side, because the plant is replaced at today’s prices.
• Use total depreciation and amortization. $710M for 2026, of which about $89M is amortization of acquired rights, which does not need replacing.³⁴ That gives about $620M to $650M.

So the range for standing still is about $400M to $650M, and I use $550M E (estimate). The rest of the guide, about $225M, is growth. At the extremes, each $100M a year of extra stand-still spending takes about $15 off my base value per share E (estimate). I cannot narrow this further from public information, and anyone who tells you a precise figure is guessing.

Quality of earnings

Four things need a footnote. First, Adjusted EBITDA leaves out items the company thinks are not routine. In the first nine months of 2026 the items came to $33.6M, of which $13.7M was net losses on sales of real estate and businesses, $8.8M charges on divested operations and $8.6M for the chief executive transition C (calculated).³ Second, the 2026 guide asks a lot of the fourth quarter. Nine-month Adjusted EBITDA is $1,807.8M. A full-year $2.4B means $592M in the fourth quarter, against $518M a year earlier, up 14%, after a 4% fall in the third C (calculated).³⁴ To get there, cash gross profit per ton would have to be nearer $11.9 than the $10.73 of last year’s fourth quarter E (estimate). My build has the fourth quarter about $60M lower, and the full year at $2.34B.

Third, cash flow is lower than it was. Operating cash flow was $971.0M for nine months against $1,270.0M, as working capital took $435.3M against $256.3M a year earlier and deferred taxes swung by about $110M C (calculated).³ Receivables are seasonal, and I do not read this as a problem, but I do not assume it all returns in the fourth quarter either. Fourth, the tax rate is 22% to 23%, and the company carries a valuation allowance on Calica losses, which it adds back to adjusted EPS.³⁴

The balance sheet

Total debt on 30 September was $4,680.6M and cash and restricted cash $172.4M, so net debt was $4.51B, or 1.9 times Adjusted EBITDA for the last twelve months.³ The weighted average maturity is 12.3 years and the average rate 4.97%. There are bonds of $400M due in 2027 at 3.90%, $500M in 2029, $750M in 2030 and $750M in 2034, and $315M of commercial paper.¹¹ The ratings are BBB+ at S&P and Fitch and Baa2 at Moody’s.⁴ The company’s target is 2.0 to 2.5 times. At 2.5 times its Adjusted EBITDA it could borrow roughly another $1.1B, which is why I treat a large deal as a live possibility C (calculated).

VIValuation

First, how this goes badly wrong

Before the numbers, I asked what would most likely ruin this business or this investment, and worked back. Three things could, and none needs a surprise.

• Volume falls and the fixed costs stay. A quarry costs about the same to run at 80% as at 100%. Tons fell 6% in 2024, and profit still rose only because price rose 11% in the same year.¹² If federal highway money lapses, and the extension signed on 2 September runs only to 11 December, and housing slows at the same time, a 10% fall in tons is ordinary, and it takes about 11% off Adjusted EBITDA before any price response E (estimate).⁹
• Cost outruns price. Unit cash cost rose 5.6% a year for nine years against price at 6.3%, and in the third quarter it rose 7% against price at 4%.³ The main costs are diesel, parts, wages and electricity. A decade of price rises that merely match cost leaves the dollars per ton flat at about $11.50 while everything else, capital included, costs more.
• A large deal at a high price. The company’s own rule is to keep debt at 2.0 to 2.5 times Adjusted EBITDA, and it is at 2.0.³ Its ROIC on the measure I prefer is 8.6%, under the rate I ask of the shares. Buying more at that rate adds size without adding value, and a $4B deal at 16 times EBITDA would return well under 9% E (estimate).

The fourth is the price itself. At 17.8 times the 2026 guide, the shares already assume that none of the three happens.

What the price implies

At $297.69 the market values Vulcan at $38.3B on 128.7M diluted shares, which is the 128.3M outstanding on 20 October plus 0.4M of dilution at the third-quarter rate C (calculated).¹²¹¹ Add $4.5B of net debt and the enterprise value is $42.8B, or 17.8 times the 2026 Adjusted EBITDA the company projects.³ That is 34.2 times its projected 2026 earnings of $8.70 a share C (calculated). The owner yield today is 2.7% E (estimate), against the 4.90% ten-year Treasury.²⁰

What does the price pay for? Keep my volumes and costs and let price per ton grow faster: it needs 6.0% a year for ten years, to $41 a ton, against 3.8% in my base. Put as the company’s own measure, cash gross profit per ton must grow 8.3% a year to about $26. The record for 2016 to 2025 is 7.1%, and it includes the inflation years.⁶⁴ The bonus plan’s stock award pays that half in full at 9.5% growth and at half at 4.5%.⁷ The price sits above the record and below that maximum. Or keep price at my base and ask volume to do it, and the answer is volume growth of 6.3% a year, or 422M tons in 2036, almost double today’s. I do not think that is possible in ten years. So the price rests on price per ton.

The multiple is the other way to see it. At each year end from 2016 to 2025, the shares plus debt were worth between 14.1 and 21.8 times that year’s Adjusted EBITDA, with the middle near 17.8 times C (calculated).¹⁸ On the same basis today’s price is 18.5 times the last twelve months C (calculated).³ So the price asks for what the market has usually paid. My base value of $182 is 12.0 times my 2026 Adjusted EBITDA E (estimate), lower than every year end in that decade. Put plainly, my numbers say the market has paid more than the cash flows justify for ten years. That could be right, or it could be that I use a higher rate and a cooler price path than buyers did. I have not adjusted the old multiples for interest rates. The price is right if the multiple holds where it has been while EBITDA grows; my value is right if it does not.

What I can’t judge

Three inputs decide this valuation and I can’t know any of them. The first is how long price can run ahead of cost. Vulcan has done it, but a good part of the record is the post-pandemic catch-up, when every supplier raised price and customers had little choice. I have no precedent for a mature building-materials company raising price 5% to 6% a year for ten years once the catch-up is done. The second is the size of the capital needed to stand still, which the company does not report; my $550M is the middle of a $400M to $650M range, and Section V shows what it costs me at the ends. The third is the Mexican assets, where a tribunal found a breach and awarded almost nothing, and where a tax audit in Mexico is described by the company itself as “strictly binary.”¹¹ I give them no value, and I cannot say that is right.

So I show a range. Read my $182 with the grids beside it.

The discount rate

I use 9.0%. The ten-year Treasury yielded 4.90% on 4 November, and Damodaran’s implied equity risk premium was 4.20% on 1 October and 4.41% on 1 November.²⁰²¹ My beta for Vulcan on month-end closes against the S&P 500, with the SPY fund as the proxy, is 0.80 over ten years, 0.98 over five and 0.84 over three. They give 8.3%, 9.0% and 8.4% C (calculated).¹²² I take 9.0%, the five-year figure, because a business this tied to construction cycles does not deserve the lowest. I apply it to the cash flows of the whole business, debt included, which is stricter than a blended rate: weighting this cost of equity with Vulcan’s 4.97% average debt rate after 23% tax gives about 8.4% C (calculated).³ The table below shows what 8% does. It is the same rate as on my CPKC page, another owner of hard-to-copy local infrastructure.

Cases and values

The model is in tons and dollars a ton, not in revenue, because the 2026 revenue line is distorted by three sales of businesses. For each year it builds Aggregates cash gross profit from tons, price and unit cost, adds Asphalt and Concrete at about $256M, takes off selling and administrative cost, and gets to Adjusted EBITDA. It then deducts income tax at 23%, stand-still capital, growth capital and working capital. It starts from my 2026 build of $2.34B, and I show the gap to the company’s $2.4B in Section V.

Bear

Federal highway money lapses or shrinks after the extension and private building slows. Shipments fall 3% in 2027 and 7% in 2028, to 206M tons, and reach only 221M by 2036. It is a hard two years, not a deep recession, so it is not a floor. Price rises 4% and then 2.5% a year, which is below cost, so cash gross profit per ton is $14.94 in 2036 and Adjusted EBITDA stays near $2.35B until 2030.

Base

Volume grows 1% in 2027 and 2% in the next two years, then 1.5%, to 266M tons. Price rises 5% in 2027 as the company guides, fading to 3.5%. Unit cost rises 3% to 3.5%. Cash gross profit per ton reaches $17.94 by 2036, 4.5% a year, and Adjusted EBITDA $4.4B.

Bull

Volume reaches the company’s 260 to 270M ton target around 2030 (258M tons) and 295M by 2036. Price rises 6.5% in 2027 and fades to 4%. Cash gross profit per ton is $21.34 in 2036, 6.4% a year, and Adjusted EBITDA $5.9B.

Growth capital is part of the cases, which is why 2027 owner cash in my base ($1.25B) is a bit under the 2025 figure. Acquisitions are not in the cases. I assume a deal earns the 9.0% I require, so that it adds nothing and takes nothing away. That is generous to the record shown in Section IV and I take it as a position, not a finding.

The weighted value of $187 uses 25% for the bear, 50% for the base and 25% for the bull. At $297.69 the price is above my bull value by 15%. Terminal value is 61% of the base enterprise value, so the first ten years of cash are worth only about 39% of it. That is typical of a long-lived franchise. It also means the whole thing rests on what Vulcan earns after 2036.

The next best use of the same dollar

The first alternative is the ten-year Treasury at 4.90%, with nothing at risk. At the price, my base returns 7.0% a year, which is 2.1 points more, for the risk of a cyclical business. The second is another page on this site. My CPKC page, a railroad, says its price asks 7.1% on my cash flows and I ask 9.0%. Vulcan’s price asks 7.0% against the same 9.0%. They are nearly the same position, and I can’t say one is better, except that Vulcan has rival quarries in most of its markets and a railroad has few rivals on a given line. The third is Vulcan’s own record, at lower prices. At the $168 I put as a margin of safety, the shares would return 9.4% on my base cash flows E (estimate), and the stock traded there as recently as April 2023.¹

Quality and price are two questions

Vulcan is a good business. It has real barriers, a record of rising profit per ton, a strong balance sheet, and a safety record better than its industry. I give it no discount for quality. The price is a separate question, and on my numbers it is the problem: 17.8 times EBITDA for a company whose volume is below its 2022 level and whose after-tax return on book capital is 8.6%. A good business can be a poor purchase at the wrong price, and this looks like that case. The market may be right that price per ton keeps rising for another decade. If it is, the shares are fairly priced and I was too cautious.

The margin of safety

My margin-of-safety price is $168. I set it so that my $126 bear value is three quarters of the price paid. That is 8% under my base value, and it leaves room for the bear case being a year or two of volume I did not see, for my stand-still capital being too low, or for a deal going wrong. At $297.69 the price is 77% above it.

VIIThe case for the price

What most people miss

Three things cut in Vulcan’s favour and get little attention. First, the company’s own targets were set on volume it does not have. In 2019 it set a goal of $9 of cash gross profit per ton on 230 to 240M tons, and met it in 2023. In 2022 it set $11 to $12 on 260 to 270M tons.¹² It reached $11.33 in 2025 on 226.8M tons, so price did the work and the volume part of the target is still ahead.⁴ Second, a lot of road money is tied to inflation. Since 2013, 35 states have raised or changed fuel taxes, and several states in Vulcan’s footprint, among them Alabama, California, Florida, Georgia and Virginia, have fuel taxes linked to inflation or other measures. In 2025 voters in 11 states approved measures expected to raise over $24B for transport.⁴ Third, the reserves are enough that growth does not need new permits for decades: 83% of the 16.6B tons are on sites already producing.⁴

The bull case

Vulcan owns the scarce asset in a business where demand is tied to population growth, price is set locally, and it keeps getting a bit more for each ton than it costs to make. The strongest statement of that comes from management. On 29 October Ronnie Pruitt said the company expects “another year of earnings growth” in 2027, with mid- to high-single-digit pricing gains.³ On 4 November Martin Marietta, its closest listed peer, said it expects mid- to high-single-digit pricing in 2027 as well.¹⁵ If both are right, and volume grows even by 2%, the arithmetic of the price starts to look possible.

I looked for published views on Vulcan from the investors I normally cite, and did not find one I could verify and date, so I do not attribute any.

Against reality

If prices rise about 6% a year, costs 3%, and volume grows to the company’s own 260 to 270M tons, the price is possible. That is close to my bull case, and the bull is worth $258. The price is 15% above it. Today the numbers are behind that path in each part. Price rose 3.7% reported in the third quarter, under the 5% to 6% the case needs.³ Unit cash cost rose 7%, double the 3% I assume.³ Volume is 4% below 2022, and the third quarter fell 3%.³⁵ The 2026 profit guide now sits at the low end of the $2.4B to $2.6B range given in February and reiterated in July, and it asks for a 14% jump in the fourth quarter.⁴¹⁰³

The record does not rule it out. Cash gross profit per ton grew 7.1% a year over nine years, and the price needs 8.3%. But 3.3% a year of price growth in the five years to 2021 is the better guide to ordinary times, and the 12.3% of the next three was inflation. It helps to multiply it out. The price needs ten years of price growth near 6% (my guess: 25%), cost held to 3% (55%), volume growth near 2% (50%) and no deal that destroys value (75%). Those multiply to 5% E (estimate). They overlap, so perhaps 10% in practice. My base needs less: price near 3.8% (60%), cost at 3% (55%), volume at 1.5% (55%) and no bad deal (75%), about 14% before overlap.

What a 10x would take. Ten times $297.69 is $2,977, or about $383B of market value on today’s shares. At 25 times earnings, below today’s 34, that needs about $15.3B of net income, 14 times the $1.12B projected for 2026. At a 20% net margin, well above today’s 14%, that is about $77B of revenue, nearly ten times this year’s revenue of about $8B C (calculated).³ That is 26% a year for ten years, from a company whose revenue grew 9.2% a year in the last nine and whose own share price rose 2.55 times in the last ten years C (calculated).¹⁸ Even a 3% fall in the share count every year would only cut that by a quarter. I know of no US building-materials company that has risen tenfold from a market value near $38B. For Vulcan tenfold from here is close to impossible, and I would not build a case on it.

Where I come down

The company’s own target moved me: $11.33 of profit a ton on 227M tons is a better starting point than I assumed, and it is why my base grows cash gross profit per ton 4.5% a year. The 2027 pricing talk from two companies at once moved me little, because both have a reason to say it. Two straight years of shipments up 3% or more with price near 5% would raise my values most, because that is where the bull case begins.

VIIIRisks, and what would change my view

The three ways this goes badly wrong are at the start of Valuation. These are the rest.

• Federal highway law. The 2021 act provides funds through the federal year that ends 30 September 2026 and Vulcan says the Federal-Aid Highway Program has supplied about half of all state spending on roads and bridges over the last ten years.⁴ Congress signed a short extension on 2 September 2026, H.R. 6500, which runs to 11 December 2026 and does not continue the IIJA advance appropriations, the multiyear General Fund money that APTA says backs transit and passenger rail among other programs. A long gap or a cut would hit public work, which is 40% to 55% of shipments.²³²⁴⁹⁴
• Energy. The company ties higher diesel costs to a conflict in the Middle East that began on 28 February 2026, and says cash cost per ton excluding diesel rose 3% in the third quarter against 7% with it.¹¹
• Weather. A wet quarter loses tons. The effect washes out over a year, but not entirely.³¹⁰
• Mexico and Honduras. 470.9M tons of reserves, or 2.8%, are in halted operations.⁴ The NAFTA decision gave almost no damages, a second case is open, and a tax audit in Mexico is described as binary.¹⁴¹¹
• Mine safety. A federal imminent-danger order at a California quarry was reported on 30 October.¹⁹ Injuries are low, and the bonus counts them.⁴
• Concentration. California and Texas are the top two states.⁴ A local downturn in either is a large part of the company.
• Labor. Vulcan employed 11,172 people in the US at the start of 2026, of whom 1,057 are union members.⁴ Wages are a main cost and the 10-K says labor constraints can slow its own work and its customers’.⁴
• Interest rates. The Treasury yields 4.90%. A company priced at 18 times EBITDA is more exposed to a higher rate than one at ten.²⁰