A Member of Pat McKeough’s Inner Circle recently asked for his advice on Vulcan Materials, America’s largest producer of construction aggregates (crushed stone, sand, and gravel) through an extensive network of quarries and distribution facilities for infrastructure, commercial, and residential construction projects nationwide.
Pat likes the firm’s dominant market position in an industry with exceptionally high barriers to entry. The company stands as the primary beneficiary of what promises to be a multi-year, non-discretionary spending cycle on roads, bridges, and public works. However, Pat notes the premium valuation at 30.5 times forward earnings leaves minimal margin for error and downside risk if the company fails to meet growth expectations.
Vulcan Materials Co. (Symbol VMC on New York; www.vulcanmaterials.com) operates mostly in the U.S. and is that nation’s largest supplier of construction aggregates. These are raw materials extracted from pits and quarries, and primarily include crushed stone, sand, and gravel.
The company is also a major producer of aggregates-intensive products such as asphalt mix and ready-mixed concrete.
Vulcan’s products are vital for building homes, offices, places of worship, schools, hospitals and factories. They are also essential for infrastructure including highways, bridges, roads, ports and harbours, water systems, campuses, dams, airports, and rail networks.
The company has three operating segments: Aggregates (74.4% of revenue), Asphalt (16.8%) and Concrete (8.8%). It has 423 aggregates facilities, 70 asphalt facilities, and 74 concrete facilities.
Vulcan sells its Aggregates in 23 U.S. states, the Virgin Islands and Washington D.C. While most of the company’s facilities are in the U.S., it does have production facilities in the Bahamas, British Columbia, Honduras, and Mexico.
The Asphalt segment produces and sells asphalt mix in Alabama, Arizona, California, New Mexico, Tennessee, and Texas. It also provides construction paving services in Alabama, Tennessee, and Texas.
The Concrete segment produces and sells ready-mixed concrete in California, Maryland, Virginia, the U.S. Virgin Islands, and Washington D.C.
Overall, five states—California, Texas, Georgia, Tennessee, and Virginia—accounted for 63% of Vulcan’s total revenue in 2024. Other strong revenue-generating states included Florida, Arizona, South Carolina, North Carolina, and Alabama.
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Vulcan’s revenue increased steadily from 2020 to 2023, climbing 60.2%, from $4.86 billion to $7.78 billion. Revenue then fell 4.7% in 2024 to $7.42 billion, as severe weather hurt sales.
Earnings before one-time items rose consistently over the last five years, along with revenue and cost cutting. Earnings per share increased 49.6%, from $4.68 a share, in 2020 to $7.00 in 2023. Per-share earnings then rose 7.6% in 2024 to $7.53.
Vulcan’s infrastructure spending will be a big growth driver
In the three months ended September 30, 2025, Vulcan’s revenue rose 14.4%, to $2.29 billion from $2.0 billion. Excluding one-time items, Vulcan earned $2.84 a share. That was up 27.9% from $2.22.
The company’s outlook is positive. Public construction activity remains a key primary driver of volume growth and Vulcan is a major beneficiary of federal infrastructure funding.
Meantime, aggregates are essential products with limited substitutes, favourable pricing, and high barriers to entry for new manufacturers. As the largest aggregates supplier in the U.S., Vulcan is in a good position to take advantage of its size and scale.
The stock currently trades at a high 30.5 times the forecast 2026 earnings per share of $9.83.
Vulcan raised its quarterly dividend by 6.5% with the June 2025 payment, to $0.49 a share from $0.46. The stock yields 0.7%.
Recommendation in Pat’s Inner Circle: Vulcan Materials Co. is okay to hold.
