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Construction Partners Inc (ROAD)
NASDAQ:ROAD
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Construction Partners
(NASDAQ:ROAD)70Outperform
Positive Factors
Acquisitions and Expansion
ROAD's acquisition of Lone Star Paving, the largest in company history, and its entrance into the large and growing Texas markets is incrementally positive.
Backlog Growth
Backlog remains at record levels with a backlog of $1.960B, increased +5.4% QOQ and +22.5% YOY, remaining at a record level.
Negative Factors
Financial Performance
F4Q24 pre-release could have been worse with ROAD's revenue and net income down from previous guidance.
Construction Partners (ROAD) vs. S&P 500 (SPY)
Market Cap
$3.88B
Dividend YieldN/A
Average Volume (3M)653.60K
Price to Earnings (P/E)65.1
Beta (1Y)1.51
Revenue Growth22.91%
EPS Growth-1.39%
CountryUS
Employees4,920
SectorIndustrials
Sector Strength66
IndustryConstruction
Share Statistics
EPS (TTM)1.07
Shares Outstanding47,183,598
10 Day Avg. Volume648,768
30 Day Avg. Volume653,598
Financial Highlights & Ratios
PEG Ratio1.59
Price to Book (P/B)N/A
Price to Sales (P/S)1.95
Price to Cash Flow (P/CF)23.90
P/FCF Ratio70.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$102.00Price Target Upside46.95% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering4
Construction Partners Business Overview & Revenue Model
Company DescriptionConstruction Partners, Inc. (NASDAQ: ROAD) is a leading infrastructure and road construction company based in the United States. The company specializes in the construction and maintenance of roadways and provides a range of services, including asphalt paving, site development, and road construction. Serving both public and private sector clients, Construction Partners operates primarily in the southeastern region of the U.S., establishing itself as a key player in the infrastructure sector.
How the Company Makes MoneyConstruction Partners primarily generates revenue through contracts for road construction and maintenance services. The company's key revenue streams include government-funded infrastructure projects, where it acts as a contractor for state and local governments, as well as private sector projects for commercial developers. Revenue is often recognized based on the progress of construction projects, with payments typically received in installments as work is completed. Key factors contributing to earnings include strong relationships with government agencies, strategic acquisitions to expand market presence, and efficient management of project costs and resources.
Construction Partners Financial Statement Overview
Summary
Construction Partners exhibits strong financial performance with consistent revenue and profit growth supported by effective cost and leverage management. The company shows solid cash flow generation capabilities, enhancing its financial stability and enabling further investment in growth opportunities.Income Statement
Construction Partners has displayed strong revenue growth, with a notable increase of 16.67% from 2023 to 2024. The gross profit margin improved to 14.16%, reflecting efficient cost management. Net profit margin rose to 3.78% in 2024, indicating enhanced profitability. The EBIT and EBITDA margins were steady at 6.1% and 6.1%, respectively, showcasing operational efficiency.85
Very Positive
Balance Sheet
The company maintains a healthy equity position with an equity ratio of 37.21%. The debt-to-equity ratio improved significantly, dropping to 0.12, indicating reduced leverage and financial risk. Return on Equity (ROE) increased to 12.01%, demonstrating strong shareholder returns.78
Positive
Cash Flow
Operating cash flow showed substantial growth, and the operating cash flow to net income ratio improved to 3.03, reflecting strong cash generation capability. The free cash flow to net income ratio also rose to 1.76, indicating efficient capital expenditure management and robust free cash flow generation.82
Very Positive
| Breakdown | ||||
| Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.82B | 1.56B | 1.30B | 910.74M | 785.68M | Gross Profit |
| 258.25M | 196.38M | 139.30M | 119.94M | 122.21M | EBIT |
| 111.24M | 81.88M | 35.41M | 30.10M | 55.23M | EBITDA |
| 111.24M | 157.13M | 99.13M | 84.48M | 92.85M | Net Income Common Stockholders |
| 68.94M | 49.00M | 21.38M | 20.18M | 40.30M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 74.69M | 48.24M | 35.53M | 57.25M | 148.32M | Total Assets |
| 1.54B | 1.22B | 1.10B | 806.62M | 628.11M | Total Debt |
| 66.29M | 390.73M | 389.83M | 222.87M | 99.65M | Net Debt |
| -8.40M | 342.48M | 354.30M | 165.62M | -48.66M | Total Liabilities |
| 968.39M | 703.09M | 639.64M | 397.72M | 242.92M | Stockholders Equity |
| 573.74M | 516.57M | 455.88M | 408.90M | 385.19M |
| Cash Flow | Free Cash Flow | |||
| 121.15M | 59.35M | -52.35M | -7.83M | 52.60M | Operating Cash Flow |
| 209.08M | 157.16M | 16.50M | 48.50M | 105.17M | Investing Cash Flow |
| -307.58M | -143.37M | -197.33M | -263.41M | -79.36M | Financing Cash Flow |
| 126.11M | -264.00K | 159.14M | 123.85M | 41.89M |
Construction Partners Technical Analysis
Negative
69.41
Price Trends
81.98
Negative
85.72
Negative
73.32
Negative
Market Momentum
-4.04
Positive
36.78
Neutral
28.90
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ROAD, the sentiment is Negative. The current price of 69.41 is below the 20-day moving average (MA) of 74.73, below the 50-day MA of 81.98, and below the 200-day MA of 73.32, indicating a bearish trend. The MACD of -4.04 indicates Positive momentum. The RSI at 36.78 is Neutral, neither overbought nor oversold. The STOCH value of 28.90 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ROAD.
Construction Partners Risk Analysis
Construction Partners disclosed 53 risk factors in its most recent earnings report. Construction Partners reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Construction Partners Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $31.07B | 34.33 | 11.79% | 0.78% | -4.68% | -1.73% | |
70 Outperform | $3.88B | 65.09 | 8.41% | ― | 22.91% | -1.39% | |
66 Neutral | $7.35B | 15.78 | 33.51% | 0.47% | 0.64% | -1.15% | |
63 Neutral | $28.07B | 14.22 | 22.83% | 0.66% | -3.56% | 70.93% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% | |
59 Neutral | $9.65B | 10.27 | 8.39% | 0.97% | -0.45% | -1.48% |
* Industrials Sector Average
Performance Comparison
ROAD
Construction Partners
69.41
18.07
35.20%
CX
Cemex SAB
6.06
-1.98
-24.63%
EXP
Eagle Materials
213.61
-37.02
-14.77%
MLM
Martin Marietta Materials
460.39
-131.92
-22.27%
VMC
Vulcan Materials
220.90
-42.63
-16.18%
Construction Partners Earnings Call Summary
Earnings Call Date: Feb 7, 2025 | % Change Since: -17.83% | Next Earnings Date: May 9, 2025
Earnings Call Sentiment Positive
The earnings call presented a positive outlook with record-breaking revenue and strong growth metrics, despite some challenges such as acquisition-related expenses impacting net income. The strategic acquisitions and robust market conditions contribute to a strong growth trajectory.Highlights
Record Revenue and Growth
CPI reported a record revenue quarter with a year-over-year growth of 42% and record backlog of $2.66 billion.
Strong EBITDA Performance
Adjusted EBITDA increased by 68% compared to the first quarter of fiscal 2024, with margins growing by almost 200 basis points.
Successful Acquisitions
CPI acquired Oberlin Corporation and Mobile Asphalt Company, expanding its market presence in Oklahoma and Alabama.
Positive Market Conditions
Strong demand for infrastructure services in the Sunbelt, with public infrastructure funding increasing year-over-year by approximately 16%.
11% Organic Growth
The company achieved an 11% organic growth rate this quarter, highlighting its focus on expanding current market operations.
Lowlights
Net Loss Due to Acquisition Expenses
Net loss of $3.1 million during the quarter, attributed to non-recurring expenses related to a transformative acquisition.
Decreased Cash Provided by Operating Activities
Cash provided by operating activities was $40.7 million compared to $60 million in the same quarter a year ago, due to weather-related changes affecting cash collections.
Company Guidance
During the Construction Partners conference call for the first quarter of fiscal 2025, management provided guidance and key metrics highlighting a strong start to the fiscal year. Revenue increased by 41.6% year-over-year to $561.6 million, with organic growth contributing 11.2% and acquisitions contributing 30.4%. The EBITDA margin improved by almost 200 basis points year-over-year, reaching 12.3%. The company reported a record project backlog of $2.66 billion, indicating strong demand for infrastructure services. Management revised its outlook for fiscal 2025, projecting revenue between $2.66 billion and $2.74 billion, with adjusted EBITDA expected to be around $335 million. Additionally, they highlighted recent strategic acquisitions, such as Oberlin Corporation and Mobile Asphalt Company, which are expected to contribute $120 million to $130 million in revenue for the fiscal year. Overall, Construction Partners remains optimistic about its growth prospects, supported by a healthy acquisition pipeline and robust market conditions in the Sunbelt region.Construction Partners Corporate Events
M&A TransactionsBusiness Operations and Strategy
Construction Partners Expands with Mobile Asphalt Acquisition
Positive
Feb 3, 2025
On February 3, 2025, Construction Partners, Inc. announced the completion of its acquisition of Mobile Asphalt Company LLC, adding five hot-mix asphalt plants and associated crews and equipment in the Mobile and southwestern Alabama market areas. This acquisition marks a significant expansion of Construction Partners’ operations in the region, enhancing its presence and aligning with economic growth driven by the Port of Mobile and coastal development. The acquired business will operate as a new branded division under Wiregrass Construction Company while maintaining the Mobile Asphalt Company name.
M&A TransactionsBusiness Operations and Strategy
Construction Partners Expands with Overland Acquisition
Positive
Jan 3, 2025
Construction Partners, Inc. has announced the acquisition of Overland Corporation, an asphalt manufacturing and paving company based in Ardmore, Oklahoma. This strategic move allows Construction Partners to enter its eighth state, expand its market presence in Oklahoma and northern Texas, and benefit from the growing asphalt demand as the Dallas metro area expands. The acquisition is expected to support sustained, profitable growth and aligns with the company’s strategy to reduce its leverage ratio over the next four to six quarters.
Other
SunTx Distributes Shares, Retains Control of Construction Partners
Neutral
Dec 11, 2024
SunTx Capital Partners II, L.P. and SunTx Capital Partners II Dutch Investors, L.P. distributed a total of 500,000 shares of Construction Partners, Inc.’s common stock to their partners without any consideration. After the distribution, SunTx Capital Partners and its affiliates continue to hold a significant stake, owning shares that represent approximately 51.2% of the combined voting power, thus maintaining a controlling interest in the company.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.