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Summit Materials (NYSE:SUM) is catching attention with shares surging to all-time-high at $45 at the time of writing, driven by a reported takeover bid from Quikrete Holdings in the “low 50s” per share range. The board is now evaluating the non-binding proposal with guidance from Morgan Stanley and Evercore, hinting at serious consideration for the deal. This comes after past interest from Heidelberg Materials and follows Summit’s recent $3.2 billion merger with Cementos Argos. The ongoing interest underlines the company’s appeal in a hot construction market.
Its stock has soared by nearly 24% in the past twelve months, backed by resilient market demand for building materials. Summit’s operational strength shows through its impressive 53% quarterly revenue growth in Q2 2024, bolstered by a robust 12.23% operating income margin over the past year. Analysts are split but optimistic, with RBC raising its rating to “outperform” and a $53 price target, while Loop Capital maintains a “Buy” despite lowering its target to $49. Morgan Stanley’s recent “Overweight” rating with a $51 target underscores confidence in Summit’s position to capitalize on the U.S. construction upswing.
With the Quikrete bid heating up a sector that’s already seen deal values rise by 33% to $59 billion this year, data reported by Bloomberg, Summit’s recent leadership shifts and strong EBITDA performance are adding momentum. As investors look at a company that’s not just weathering market dynamics but driving growth, the potential acquisition could mark a pivotal moment, rewarding those who recognize its operating strength and future upside.
This article first appeared on GuruFocus.