Eagle Materials Inc. (EXP): A Bull Case Theory

We came across a bullish thesis on Eagle Materials Inc. on Stock Analysis Compilation’s Substack. In this article, we will summarize the bulls’ thesis on EXP. Eagle Materials Inc.’s share was trading at $221.47 as of July 23^rd. EXP’s trailing and forward P/E were 16.08 and 15.62, respectively according to Yahoo Finance.

Eagle Materials stands out in the construction materials sector through a rare combination of upstream resource ownership and high-return cement and wallboard operations, enabling pricing power and disciplined capital allocation that the market often misjudges. With returns on incremental invested capital around 30%, Eagle has consistently generated exceptional profitability in what is widely considered a commodity business.

Over the past decade, the company has repurchased over a third of its shares, compounding value for long-term investors. Its unique position lies between low-margin downstream ready-mix concrete producers and upstream quarrying companies, owning scarce limestone reserves while operating an efficient cement manufacturing footprint. Unlike foreign-owned peers that pursue low-return concrete operations, Eagle’s focus on cement has produced industry-leading returns.

Its wallboard business, though less robust, benefits from structural supply constraints: the material’s fragility limits shipping radius to 300 miles, and the shift away from coal-fired power plants has sharply reduced the supply of synthetic gypsum. Owning 60 years of gypsum reserves, Eagle secures its input supply and maintains a stable cost structure, ensuring full capture of pricing gains in a constrained market.

Investors often undervalue Eagle by grouping it with cement peers that lack similar resource ownership or capital discipline, overlooking its capacity to generate resilient cash flows and sustain high returns. Management can either unlock this mispricing by spinning off its heavy materials business, as considered in 2019, or continue disciplined buybacks, allowing value to compound. The company’s differentiated model offers durable advantages and a long runway for shareholder value creation.

Previously we covered a bullish thesis on Eagle Materials Inc. (EXP) by Margin of Sanity in May 2025, which highlighted its dominance in localized markets, strategic asset acquisitions, and disciplined capital allocation. The company’s stock price has depreciated about 7.7% since our coverage due to market volatility. The thesis still stands. Stock Analysis Compilation shares a similar view but emphasizes Eagle’s upstream resource ownership and pricing power.

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Disclosure: None.