Eagle Materials: Best-in-Class Cement and Wallboard Compounder

Stephen Dodson of Bretton Fund presented his investment thesis on Eagle Materials (US: EXP) at Best Ideas 2025.

Thesis summary:

Eagle Materials is a long-term compounder in a so-so, cyclical industry. It has $2.5 billion in revenue and an $8 billion market cap.

The business mix is ~50% cement, ~50% wallboard. Eagle has best-in-class margins and returns on capital (2-3x average). Tailwinds include favorable industry growth, combined with structural competitive advantages.

Management has exhibited excellent capital allocation. Eagle is a best-in-class operator with 40% ROE and a modest valuation at a P/E of less than 15x. The company remains relatively unknown, but is a compounder, with a long runway. The business enjoys structural, durable advantages.

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About the instructor:

Stephen Dodson is the president and founder of Bretton Capital Management and serves as the portfolio manager to the Bretton Fund, a mutual fund with a long-term, concentrated, value strategy. Stephen serves on the San Francisco advisory board for YIMBY Action, a housing advocacy group.

Prior to founding Bretton in 2010, he served as president, portfolio manager, and chief operating officer of Parnassus Investments, a family of mutual funds. He previously worked for the venture capital group of Advent International, a private equity firm, and was an investment banker for Morgan Stanley in New York and Menlo Park.