Construction Partners (ROAD) AI Stock Analysis

• Market Cap: $5.10B
• Dividend Yield: N/A
• Average Volume (3M): 465.26K
• Price to Earnings (P/E): 85.5
• Beta (1Y): 1.38
• Revenue Growth: 22.91%
• EPS Growth: -1.39%
• Country: US
• Employees: 1,325
• Sector: Industrials
• Sector Strength: 81
• Industry: Engineering & Construction
• EPS (TTM): 0.25
• Shares Outstanding: 47,183,598
• 10 Day Avg. Volume: 386,407
• 30 Day Avg. Volume: 465,260
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.16
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 22.93
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $102.00
• Price Target Upside: 11.89% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

Construction Partners benefits from strong financial performance and a positive earnings outlook driven by strategic acquisitions and a robust project backlog. However, the high valuation and potential technical resistance may temper near-term upside potential. The company's strong market position and strategic expansion efforts provide a solid foundation for future growth, though investors should be mindful of the stock's current valuation.

Positive Factors

Financial Performance

Construction Partners Incorporated has seen its backlog reach record levels, increasing by 5.4% sequentially and 22.5% annually, which reflects strong demand and potential future revenue growth.

Organic Growth

Management's effective execution has led to organic revenue growth and margin expansion, highlighting a positive outlook for the company's operational performance.

Strategic Expansion

The acquisition of Lone Star Paving is a major strategic move, providing a new foothold in the large Texas market and offering high margins that are expected to enhance earnings.

Negative Factors

Revenue Guidance

ROAD's pre-release for the fourth quarter showed a decrease in revenue and net income compared to previous guidance, indicating potential challenges in meeting forecasted financial targets.

Construction Partners Business Overview & Revenue Model

Company Description

Construction Partners, Inc., a civil infrastructure company, engages in the construction and maintenance of roadways across Alabama, Florida, Georgia, North Carolina, and South Carolina. The company, through its subsidiaries, provides various products and services to public and private infrastructure projects, with a focus on highways, roads, bridges, airports, and commercial and residential developments. It also engages in manufacturing and distributing hot mix asphalt (HMA) for internal use and sales to third parties in connection with construction projects; paving activities, including the construction of roadway base layers and application of asphalt pavement; site development, including the installation of utility and drainage systems; mining aggregates, such as sand and gravel that are used as raw materials in the production of HMA; and distributing liquid asphalt cement for internal use and sales to third parties in connection with HMA production. The company was formerly known as SunTx CPI Growth Company, Inc. and changed its name to Construction Partners, Inc. in September 2017. Construction Partners, Inc. was incorporated in 1999 and is headquartered in Dothan, Alabama.

How the Company Makes Money

Construction 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 demonstrates solid financial health with strong revenue growth and effective cash flow management. Despite slight declines in profitability margins, the low debt levels and robust equity position provide a stable financial foundation. Strategic improvements in cost management could further enhance profitability and shareholder returns.

Income Statement

Construction Partners shows strong revenue growth with a TTM (Trailing-Twelve-Months) increase of 9.06% compared to the previous year. Gross and net profit margins are healthy at 14.23% and 2.82% respectively. The EBIT margin stands at 5.41%, indicating efficient operational control. However, the TTM net profit margin has decreased compared to the previous annual report, suggesting room for improvement in cost management.

Balance Sheet

The company's balance sheet is stable with a debt-to-equity ratio of 0.10, reflecting low leverage and financial stability. The equity ratio is strong at 31.59%, indicating a solid financial base. Return on equity is at 6.91%, suggesting moderate profitability for shareholders. While the financial leverage is low, there's potential to enhance ROE through improved net income.

Cash Flow

Operating cash flow is robust, substantially exceeding net income with an operating cash flow to net income ratio of 3.38, indicating strong cash generation capability. Free cash flow growth is negative at -16.34%, reflecting higher capital expenditures. Despite this, the free cash flow to net income ratio is 1.81, showing effective cash flow management.

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
553.25M	390.73M	389.83M	222.87M	99.65M
	Net Debt
478.56M	342.48M	354.30M	165.62M	-48.66M
	Total Liabilities
994.74M	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

• Technical Analysis Sentiment: Positive
• Last Price: 91.16
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ROAD, the sentiment is Positive. The current price of 91.16 is above the 20-day moving average (MA) of 81.63, above the 50-day MA of 75.84, and above the 200-day MA of 77.60, indicating a bullish trend. The MACD of 3.82 indicates Negative momentum. The RSI at 67.39 is Neutral, neither overbought nor oversold. The STOCH value of 90.63 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ROAD.

Construction Partners Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ROAD	78 Outperform	$5.10B	85.49	8.41%	―	22.91%	-1.39%
PRIM	78 Outperform	$3.51B	17.78	15.30%	0.42%	12.45%	42.45%
STRL	76 Outperform	$5.23B	20.09	36.67%	―	4.84%	77.84%
IESC	75 Outperform	$4.73B	20.68	37.73%	―	21.53%	66.65%
GVA	72 Outperform	$3.59B	36.48	12.75%	0.63%	11.42%	247.33%
DY	70 Outperform	$5.29B	23.23	20.35%	―	12.61%	7.43%
Sector *	64 Neutral	$4.25B	11.72	5.24%	249.79%	4.07%	-9.45%

Construction Partners Corporate Events

Construction Partners Expands with Tennessee Acquisitions

On May 1, 2025, Construction Partners, Inc. announced the acquisition of PRI of East Tennessee, Inc. and Pavement Restorations, Inc., expanding its infrastructure business in Tennessee. This acquisition adds a hot-mix asphalt plant and a specialized pavement preservation business to its operations, enhancing its market presence in Tennessee from Knoxville to the Memphis metro area. The move is expected to leverage the expertise of PRI’s management team and capitalize on Tennessee’s economic growth and transportation funding, positioning Construction Partners as a leader in the pavement preservation industry.

Spark’s Take on ROAD Stock

According to Spark, TipRanks’ AI Analyst, ROAD is a Outperform.

Construction Partners shows strong financial performance, driven by robust revenue growth and effective cash flow management. The positive earnings call highlighted strategic acquisitions and a strong project backlog, which support future growth prospects. However, the high P/E ratio suggests the stock is currently overvalued, which may limit near-term upside potential. Technical indicators suggest moderate upward momentum, tempered by potential resistance.

To see Spark’s full report on ROAD stock, click here.