Ricardo Pillai
3 min read
In This Article:
We came across a bullish thesis on Eagle Materials Inc. on Special Situation Investing’s Substack by Six Bravo. In this article, we will summarize the bull’s thesis on EXP. Eagle Materials Inc.'s share was trading at $196.75 as of June 20th. EXP’s trailing and forward P/E were 14.29 and 12.58, respectively, according to Yahoo Finance.
A large construction project with cranes and forklifts in action, demonstrating the company's building materials business.
Eagle Materials (EXP) presents a compelling investment opportunity in an overlooked yet essential industry—cement. Inspired by a cascade of coincidental references, including Vaclav Smil’s emphasis on the indispensability, the author’s attention turned to cement, a sector often criticized for its environmental impact yet critical to modern infrastructure.
Eagle Materials, spun out of Centex Corporation in 1994, has built a disciplined and focused business with operations in cement, concrete, aggregates, wallboard, and paperboard, mainly concentrated in the U.S. heartland. The company’s “no-frills” culture emphasizes operational efficiency, value-accretive acquisitions, and decentralized decision-making, resulting in strong financial performance.
Despite a brief dip in 2020, EXP’s revenue, earnings, and free cash flow per share have consistently trended upward over the past decade, aided by aggressive but steady share repurchases. Since 2011, EXP has reduced its share count by nearly 30% and returned $3.2 billion to shareholders via buybacks and dividends. Cement industry structure adds further appeal: stringent regulations have constrained new supply, while high transportation costs create localized monopolies, giving firms like EXP durable pricing power.
These dynamics, coupled with EXP’s 7.36% average buyback yield and consistent capital discipline, could lead to continued shareholder value creation. Despite being in a vilified industry, similar to coal and oil, cement is indispensable, and EXP appears well-positioned to benefit from rising infrastructure demand while quietly compounding returns. Although the authors haven’t invested yet, the setup—a misunderstood but critical industry, high returns on capital, and strong pricing power—makes cement and EXP particularly worth deeper investigation.
Previously, we covered a bullish thesis on Eagle Materials Inc. by Margin of Sanity in May 2025, which highlighted regional monopolies, vertical integration, and disciplined capital allocation. The company’s stock price has depreciated by approximately 18% since our coverage, as the thesis didn’t play out. However, the thesis still stands as Six Bravo shares a similar view but emphasizes cement’s misunderstood indispensability.
