ROAD Stock Overview
Construction Partners, Inc., a civil infrastructure company, engages in the construction and maintenance of roadways across Alabama, Florida, Georgia, North Carolina, and South Carolina.
Construction Partners Competitors
Price History & Performance
|Historical stock prices|
|Current Share Price||US$26.12|
|52 Week High||US$44.99|
|52 Week Low||US$18.89|
|1 Month Change||-14.28%|
|3 Month Change||25.88%|
|1 Year Change||-22.72%|
|3 Year Change||71.28%|
|5 Year Change||n/a|
|Change since IPO||115.87%|
Recent News & Updates
Some Investors May Be Worried About Construction Partners' (NASDAQ:ROAD) Returns On Capital
Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Firstly, we'd want to...
Construction Partners: Still Rolling And Paving The Road To Profits
I will review the results from my initial article about this company from nearly three years ago. Readers will see my update for my current thesis on what the company offers its investors. I will share my projections for the near-term outlook for the share price. We are fast approaching the third anniversary (9/20/2019) of my original SA article related to Construction Partners (ROAD). Over this three-year span, we have experienced the COVID-19 pandemic that basically brought much of the world to a standstill. Earlier this year we experience the stock market undertaking a massive correction, where luckily it has over recent weeks stabilized and moved upward, finally. For those who might have invested in Construction based on my original article, we have seen the stock over this period go from $16.21 to the current $30.00 level. If I'm allowed to say so -- an increase of 86% return compared to the S&P 500 increasing by only 40% over the same period, I'm very pleased with my investment in Construction Partners. But with this article, I will update my thesis and outline why I think the stock has further to run in the near term and more assuredly in the long-term. With this updated article I plan to enter it into the Seeking Alpha contest - Top Stock with a Catalyst. As all investors should know a catalyst for a particular stock can work both ways - creating a buying opportunity or creating a need to sell your position in the stock. With my update, my overwhelming position is that current catalysts are in a place where ownership of the stock is an opportune time for investors. However, since we are in a pivotal time with crosswinds and barriers on a worldwide basis impacting our economies, it is prudent to be aware of issues that can turn a buying opportunity into a need for selling. Therefore, after making my case for owning the stock I will devote some space to informing my readers of what they should be aware of as there are issues that could impact the valuation of the stock. And for that matter, it could impact the overall market. A general rule of investing is that deciding to buy a stock is easy. Deciding when to sell is the hardest part. Having a plan for when to sell should be a part of every investment decision. Business Model Features: Construction Partners' business model is built around publicly funded projects for local and state roadways, interstate highways, airport runways, and bridges. In the private sector, its efforts are directed toward paving and site work services for office and industrial parks, shopping centers and local businesses, and residential subdivisions. The company is concentrating its growth by focusing on five southeastern states: Alabama, Florida, Georgia, South Carolina, and North Carolina. As a region, the Southeast, including the populous states of Florida, Georgia, and North Carolina are the states contributing just over a fifth of the total United States gross domestic product ((GDP)). Key Points: Infrastructure and the upgrades expected in the markets where the company is concentrating its efforts are in a long-term upward trend for both the need and the funding to address the resulting problems. Population growth in Florida, Georgia, and North Carolina continues to attract growth from new residents moving into their states. Not only is it just population growth in the states, where they have operations but there is also major manufacturing construction taking place in these states. Both are key metrics that make the southeastern states a focal point of needing to upgrade their state and interstate highways. The company operates in a very diverse market area where one cancellation or project completion date will not skew the overall quarterly and yearly financial results. Plus, bad weather brought on by snow, sleet, and ice will not delay project work. However, the prospect of a hurricane being so destructive, though devastating for the area impacted, the recovery work will provide more project opportunities for the company. Interim Events Since My Original 2019 Article: In my initial article, I cited the fact that the company had 32 hot mix asphalt plants-HMAs, located within the area where they concentrate their work projects. With well-coordinated planning and understanding of the demographics of the marketplace they now own and operate 59 HMAs. One must consider that the major thrust of the company is bidding and winning the actual projects where they manage the construction work needed. However, they manufacture and store the major product needed to undertake the paving, whether on highways or building out a new subdivision for home construction -that being asphalt. The point is, by having the asphalt and having it readily available for other contractors they can generate revenue from projects where they aren't the actual construction company overseeing the work. Considering that Construction Partners has grown their ownership of such HMAs by about 85%, they are building out a sustainable business model that allows them to buy the smaller "mom and pop" operations that become accretive to their ability to generate revenues and profits. Construction Partners operates on a fiscal year ending in September, so they are currently in the final quarter of 2022 results. When I wrote my initial article in 2019, the company ended by generating revenues totaling $783,238,000.00. With their recent quarterly earnings report, management has increased their revenue projects in the range of $1.25 billion to $1.28 billion. By merely hitting the lower projection, this indicates an interim growth of approximately 60%. Financial Highlights as of June 2022 3rd Quarter Results vs. YOY Comparison: Revenues: $380.27 Million vs. $261.66 Million in 2021=45% growth Gross Profit: $44.3 million vs. $36.8 million in 2021=21% Growth G&A Expense: $26.6 million vs. $23.2 million in 2021 (7.0% of Revenue vs. 8.9% in 2021 Net Income: $12.2 million vs. $9.3 million in 2021=30% increase in Adjusted EBITDA: $37.6 million vs. $29.0 million=30% increase Project Backlog: $1.33 billion vs. $822.9 million in 2021=61% increase What I've shared are what I consider the basics for the metrics needed for a company to be successful in generating revenue and profit growth. Before investing any investor should apply their own specific metrics based on their profile. Then the investor should do their due diligence on the merits of the company meeting their criteria. I'm not an expert on accounting principles and I certainly don't know the investing profile for my readers. What I am advocating - use my article as a starting point and then do your homework - due diligence. I would also like to add information that management shared in their recent quarterly comments where I think it addresses a critical issue for their stellar revenue and profit growth. Much of this quarterly report's financial data was generated from contracts that were signed and committed to before the huge inflationary factors hit our economy. Therefore, many of the projects were being done when these inflationary factors hit. For example, just the price of fuel to operate the equipment we saw the price north of $5.00 a gallon. In their comments during the quarterly report, management mentioned that a large amount of these older contracts had been completed and now they are starting work on projects that factor in these previously unaccounted-for expenses. If most of the inflationary numbers have reached their peak and could be declining, this bodes well for maintaining growth in the gross profits for the company. Catalyst For Future Success-The Good and the Bad: The most obvious catalyst is the known federal approval for recent spending bills that include billions of dollars in grants for updating and building roads, bridges, and other related projects throughout the country. The $739 billion allocated in the Inflation Reduction Act--IRA, signed into law a week ago, is going to make a big impact on infrastructure projects. Certain parts of the IRA bill will not begin showing benefits for several years - the drug price reduction component being just one example. Therefore, what I want to see are the specific benefits being derived from key individual components of the federal funding, and how serious we are in creating projects in these areas. We need long-term solutions that will maintain continued growth for our economy based on our mobility and having an adequate source of water. For years we have faced the never-ending debate over the construction of crude oil transportation pipelines. This issue has involved and spilled over into Canada. We are at a crossroads, but it is time we face the reality that burning carbon-based fuels must be addressed. One of the best articles I've read recently is Alexander Kaufman's - The US Finally Has a Real Climate Law. Kaufman does a good job of balancing his article by giving both sides of the debate consideration. One of the major topics he covers is the fact that pipelines can be converted into other usages, other than transporting crude oil. I'm a stockholder in Exxon (XOM) and have been for years. But Exxon is beginning to diversify from dependence on crude oil production. In their west Texas field operations, their source of energy maintaining their facilities is coming from wind turbines generating electricity. Many people are probably not aware that Texas is already the largest producer of wind-generated power. Right in the center of west Texas oil country, the landscape is covered with wind turbines. Only a few weeks ago, it was announced that 24 nautical miles off the coast of Galveston, Texas, a tract of 546,645 acres will be a wind turbine project that will have the potential to power 2.3 million homes. Change is coming for the energy sources we have been using for many, many decades. On a personal note, my monthly electricity bills over the last two months are running more than 200% higher when compared to last year. Kaufman offers one clear example of the need for pipelines where he discusses the need for capturing carbon dioxide and storing it. This will require massive new numbers of workers and project facilities. A key takeaway from Kaufman is this part of his article: Found just after the --Do Past Perils Doom Future Promises -- section of the article. The cited facility was closed as it was not generating a viable economic model. it is now hoped with the new legislation it can be reopened and become a sustainable operation our environment needs it: The remarkable thing about Petra Nova is that it was built on time and on budget with limited taxpayer subsidies," Jenkins said. "What it shows is the risk for utilities and power-plant owners to rely on enhanced oil recovery for their revenues. That's why I'm not as concerned as some of the environmental advocates are. The W.A. Parish power plant on Sept. 5, 2014, in rural Fort Bend County, Texas. The plant was later equipped with carbon capture and sequestration project known as Petra Nova. Combining the $35 credit with revenue from drilling oil at $100 per barrel brought the total price per ton of CO2 to about $58 - well above the flat $50 for storing CO2. The new law changes that. Using carbon for oil drilling will now be worth a $60 per ton tax credit. If the price per barrel of oil remains at about $100, then the net gain from selling a ton of carbon to an oil driller would be about $73 - well below the $85 available per ton of CO2 that gets stored underground, and that assumes oil prices remain high. If a company is capturing 1 million metric tons of carbon dioxide per year, that's a $12 million difference. It is now more valuable to store CO2 than to use it for enhanced oil recovery," said Julio Friedmann, a research fellow at Columbia University's Center for Global Energy Policy. "That was not quite the case in the last bill. It is unambiguously the case now." My point in bringing up this topic is that finally, the federal legislation is making these projects feasible and worth the effort for both oil companies and the environmental companies doing the collecting of the carbon dioxide. The next area of attention relates to the mobility we have within our nation - goods being transported to the manufacturing facilities, goods being transported to the retail businesses, and people traveling for business or vacations. Recently I saw a chart outlining the ten areas where we have recently seen a moderation in the prices of their product - four of the ten related to transportation and mobility - car rentals, airfares, hotel rates, and gasoline. Each of these examples directly relates to the business model that Construction Partners operates. The last CPI report showed a slight moderating in the extremely high rate we have seen building for much of 2022. But one month does not signify a continuation in such moderating in prices. We are now nearly through August and let's assume we will see another small downtick in the CPI rate. That would be good. However, I think it will be the September report that gives us a true indication that we are not moving into a recession. And I expect that we will see one more 75-point upward movement in the federal funds rate. The September numbers should be a better set of numbers as the schools will be open making it more normal. Retailers will or will not be ordering for the Christmas Holiday. Then we can see if our economic system is working better than it has in recent months.
|ROAD||US Construction||US Market|
Return vs Industry: ROAD underperformed the US Construction industry which returned 4.1% over the past year.
Return vs Market: ROAD underperformed the US Market which returned -21.6% over the past year.
|ROAD Average Weekly Movement||7.0%|
|Construction Industry Average Movement||5.1%|
|Market Average Movement||6.9%|
|10% most volatile stocks in US Market||15.9%|
|10% least volatile stocks in US Market||2.8%|
Stable Share Price: ROAD is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 7% a week.
Volatility Over Time: ROAD's weekly volatility (7%) has been stable over the past year.
About the Company
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.
Construction Partners Fundamentals Summary
|ROAD fundamental statistics|
Is ROAD overvalued?See Fair Value and valuation analysis
Earnings & Revenue
|ROAD income statement (TTM)|
|Cost of Revenue||US$1.06b|
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
|Earnings per share (EPS)||0.31|
|Net Profit Margin||1.36%|
How did ROAD perform over the long term?See historical performance and comparison
Is ROAD undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score 2/6
Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Key Valuation Metric
Which metric is best to use when looking at relative valuation for ROAD?
Other financial metrics that can be useful for relative valuation.
|What is ROAD's n/a Ratio?|
Price to Earnings Ratio vs Peers
How does ROAD's PE Ratio compare to its peers?
|ROAD PE Ratio vs Peers|
|Company||PE||Estimated Growth||Market Cap|
MYRG MYR Group
NVEE NV5 Global
PRIM Primoris Services
GVA Granite Construction
ROAD Construction Partners
Price-To-Earnings vs Peers: ROAD is expensive based on its Price-To-Earnings Ratio (84.9x) compared to the peer average (32.9x).
Price to Earnings Ratio vs Industry
How does ROAD's PE Ratio compare vs other companies in the US Construction Industry?
Price-To-Earnings vs Industry: ROAD is expensive based on its Price-To-Earnings Ratio (84.9x) compared to the US Construction industry average (26.1x)
Price to Earnings Ratio vs Fair Ratio
What is ROAD's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
|Current PE Ratio||84.9x|
|Fair PE Ratio||46.1x|
Price-To-Earnings vs Fair Ratio: ROAD is expensive based on its Price-To-Earnings Ratio (84.9x) compared to the estimated Fair Price-To-Earnings Ratio (46.1x).
Share Price vs Fair Value
What is the Fair Price of ROAD when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: ROAD ($26.12) is trading below our estimate of fair value ($29.59)
Significantly Below Fair Value: ROAD is trading below fair value, but not by a significant amount.
Analyst Price Targets
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.
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How is Construction Partners forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?
Future Growth Score4/6
Future Growth Score 4/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: ROAD's forecast earnings growth (54.5% per year) is above the savings rate (1.9%).
Earnings vs Market: ROAD's earnings (54.5% per year) are forecast to grow faster than the US market (14.7% per year).
High Growth Earnings: ROAD's earnings are expected to grow significantly over the next 3 years.
Revenue vs Market: ROAD's revenue (13.2% per year) is forecast to grow faster than the US market (7.6% per year).
High Growth Revenue: ROAD's revenue (13.2% per year) is forecast to grow slower than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: ROAD's Return on Equity is forecast to be low in 3 years time (10.1%).
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How has Construction Partners performed over the past 5 years?
Past Performance Score1/6
Past Performance Score 1/6
Growing Profit Margin
Earnings vs Industry
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: ROAD has high quality earnings.
Growing Profit Margin: ROAD's current net profit margins (1.4%) are lower than last year (3.5%).
Past Earnings Growth Analysis
Earnings Trend: ROAD's earnings have declined by 12.9% per year over the past 5 years.
Accelerating Growth: ROAD's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.
Earnings vs Industry: ROAD had negative earnings growth (-45.8%) over the past year, making it difficult to compare to the Construction industry average (16.7%).
Return on Equity
High ROE: ROAD's Return on Equity (3.8%) is considered low.
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How is Construction Partners's financial position?
Financial Health Score3/6
Financial Health Score 3/6
Short Term Liabilities
Long Term Liabilities
Financial Position Analysis
Short Term Liabilities: ROAD's short term assets ($389.1M) exceed its short term liabilities ($204.1M).
Long Term Liabilities: ROAD's short term assets ($389.1M) exceed its long term liabilities ($385.5M).
Debt to Equity History and Analysis
Debt Level: ROAD's net debt to equity ratio (76.1%) is considered high.
Reducing Debt: ROAD's debt to equity ratio has increased from 37.9% to 82.1% over the past 5 years.
Debt Coverage: ROAD's debt is not well covered by operating cash flow (8.3%).
Interest Coverage: ROAD's interest payments on its debt are well covered by EBIT (5.2x coverage).
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What is Construction Partners's current dividend yield, its reliability and sustainability?
Dividend Score 0/6
Cash Flow Coverage
Dividend Yield vs Market
Notable Dividend: Unable to evaluate ROAD's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.
High Dividend: Unable to evaluate ROAD's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.
Stability and Growth of Payments
Stable Dividend: Insufficient data to determine if ROAD's dividends per share have been stable in the past.
Growing Dividend: Insufficient data to determine if ROAD's dividend payments have been increasing.
Earnings Payout to Shareholders
Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.
Cash Payout to Shareholders
Cash Flow Coverage: Unable to calculate sustainability of dividends as ROAD has not reported any payouts.
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How experienced are the management team and are they aligned to shareholders interests?
Average management tenure
Jule Smith (52 yo)
Mr. Fred Julius Smith, III also known as Jule, has been President and Chief Executive Officer at Construction Partners, Inc. since April 1, 2021. He serves as Director at Construction Partners, Inc. since...
CEO Compensation Analysis
Compensation vs Market: Jule's total compensation ($USD3.94M) is about average for companies of similar size in the US market ($USD5.58M).
Compensation vs Earnings: Jule's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.
Experienced Management: ROAD's management team is seasoned and experienced (5.7 years average tenure).
Experienced Board: ROAD's board of directors are seasoned and experienced ( 13.2 years average tenure).
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: ROAD insiders have only sold shares in the past 3 months.
Recent Insider Transactions
|19 Sep 22||SellUS$87,730||Noreen Skelly||Individual||3,100||US$28.30|
|13 Sep 22||SellUS$20,937||Mark Matteson||Individual||704||US$29.74|
|12 Sep 22||SellUS$663,351||Craig Jennings||Individual||23,725||US$27.96|
|12 Sep 22||SellUS$686,687||Mark Matteson||Individual||24,757||US$28.65|
|09 Aug 22||SellUS$222,674||Stefan Shaffer||Individual||7,697||US$28.93|
|12 May 22||BuyUS$628,200||John Harper||Individual||30,000||US$21.05|
|21 Dec 21||SellUS$20,244||John Harper||Individual||700||US$28.92|
Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.
|Ownership||Name||Shares||Current Value||Change %||Portfolio %|
Construction Partners, Inc.'s employee growth, exchange listings and data sources
- Name: Construction Partners, Inc.
- Ticker: ROAD
- Exchange: NasdaqGS
- Founded: 1999
- Industry: Construction and Engineering
- Sector: Capital Goods
- Implied Market Cap: US$1.373b
- Shares outstanding: 52.55m
- Website: https://www.constructionpartners.net
Number of Employees
- Construction Partners, Inc.
- 290 Healthwest Drive
- Suite 2
- United States
|Ticker||Exchange||Primary Security||Security Type||Country||Currency||Listed on|
|ROAD||NasdaqGS (Nasdaq Global Select)||Yes||Class A Common Stock||US||USD||May 2018|
|CQY||DB (Deutsche Boerse AG)||Yes||Class A Common Stock||DE||EUR||May 2018|
Company Analysis and Financial Data Status
|Data||Last Updated (UTC time)|
|Company Analysis||2022/09/23 00:00|
|End of Day Share Price||2022/09/23 00:00|
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.