Contrasting Vulcan Materials (VMC) and Smart Sand (NASDAQ:SND)

Vulcan Materials (NYSE: VMC) and Smart Sand (NASDAQ:SND) are both construction companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, valuation, analyst recommendations and dividends.

Dividends

Vulcan Materials pays an annual dividend of $1.00 per share and has a dividend yield of 0.8%. Smart Sand does not pay a dividend. Vulcan Materials pays out 35.0% of its earnings in the form of a dividend. Smart Sand has raised its dividend for 3 consecutive years.

Earnings and Valuation

This table compares Vulcan Materials and Smart Sand’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Vulcan Materials $3.59 billion 4.53 $419.49 million $2.86 43.05
Smart Sand $59.23 million 6.31 $10.37 million $0.65 14.25

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

Insider and Institutional Ownership

89.1% of Vulcan Materials shares are owned by institutional investors. Comparatively, 49.6% of Smart Sand shares are owned by institutional investors. 0.9% of Vulcan Materials shares are owned by insiders. Comparatively, 46.4% of Smart Sand shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings for Vulcan Materials and Smart Sand, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Vulcan Materials 0 2 5 0 2.71
Smart Sand 0 4 6 0 2.60

Vulcan Materials currently has a consensus price target of $139.29, indicating a potential upside of 13.14%. Smart Sand has a consensus price target of $13.45, indicating a potential upside of 45.25%. Given Smart Sand’s higher possible upside, analysts plainly believe Smart Sand is more favorable than Vulcan Materials.

Profitability

This table compares Vulcan Materials and Smart Sand’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Vulcan Materials 10.20% 8.71% 4.38%
Smart Sand 18.67% 14.41% 11.85%

Summary

Smart Sand beats Vulcan Materials on 9 of the 16 factors compared between the two stocks.

About Vulcan Materials

Vulcan Materials Company is a supplier of construction aggregates (primarily crushed stone, sand and gravel) and a producer of asphalt mix and ready-mixed concrete. The Company operates through four segments: Aggregates, Asphalt Mix, Concrete and Calcium. The Aggregates segment produces and sells aggregates (crushed stone, sand and gravel, sand, and other aggregates) and related products and services (transportation and other). The Company produces and sells asphalt mix in Arizona, California, New Mexico and Texas. The Company produces and sells ready-mixed concrete in Georgia, Maryland, New Mexico, Texas, Virginia, Washington District of Columbia and the Bahamas. The Calcium segment consists of a Florida facility that mines, produces and sells calcium products. As of December 31, 2016, it had 337 active aggregates facilities. The Company sells aggregates that are used as ballast for construction and maintenance of railroad tracks.

About Smart Sand

Smart Sand, Inc. is a producer of Northern White raw frac sand, which is a proppant used to enhance hydrocarbon recovery rates in the hydraulic fracturing of oil and natural gas wells. The Company sells its products primarily to oil and natural gas exploration and production companies and oilfield service companies under a combination of long-term take-or-pay contracts and spot sales in the open market. It owns and operates a raw frac sand mine and related processing facility near Oakdale, Wisconsin. In addition to the Oakdale facility, it owns a second property in Jackson County, Wisconsin, known as Hixton site. Its sand reserves include a balanced concentration of coarse (20/40, 30/50 and 40/70 gradation) sands and fine (60/140 gradation) sand. Its reserves contain deposits of approximately 20% of 20/40 and coarser substrate, over 40% of 40/70 mesh substrate and approximately 40% of 100-mesh substrate. Its 30/50 gradation is a derivative of the 20/40 and 40/70 blends.

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