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Construction Partners, Inc. (ROAD) Hit a 52 Week High, Can the Run Continue?
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Shares of Construction Partners (ROAD - Free Report) have been strong performers lately, with the stock up 9.1% over the past month. The stock hit a new 52-week high of $67.21 in the previous session. Construction Partners has gained 54.4% since the start of the year compared to the 20.2% move for the Zacks Construction sector and the 16.5% return for the Zacks Building Products - Miscellaneous industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 9, 2024, Construction Partners reported EPS of $0.59 versus consensus estimate of $0.54 while it beat the consensus revenue estimate by 2.95%.
For the current fiscal year, Construction Partners is expected to post earnings of $1.43 per share on $1.85 billion in revenues. This represents a 52.13% change in EPS on a 18% change in revenues. For the next fiscal year, the company is expected to earn $1.79 per share on $2.08 billion in revenues. This represents a year-over-year change of 25.17% and 12.47%, respectively.
Valuation Metrics
Construction Partners may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Construction Partners has a Value Score of B. The stock's Growth and Momentum Scores are A and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 47.1X current fiscal year EPS estimates, which is a premium to the peer industry average of 19.4X. On a trailing cash flow basis, the stock currently trades at 27.6X versus its peer group's average of 14.9X. Additionally, the stock has a PEG ratio of 1.52. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Construction Partners currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Construction Partners passes the test. Thus, it seems as though Construction Partners shares could still be poised for more gains ahead.
How Does ROAD Stack Up to the Competition?
Shares of ROAD have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Frontdoor Inc. (FTDR - Free Report) . FTDR has a Zacks Rank of # 1 (Strong Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of B.
Earnings were strong last quarter. Frontdoor Inc. beat our consensus estimate by 27%, and for the current fiscal year, FTDR is expected to post earnings of $2.79 per share on revenue of $1.83 billion.
Shares of Frontdoor Inc. have gained 3.6% over the past month, and currently trade at a forward P/E of 17.34X and a P/CF of 17.28X.
The Building Products - Miscellaneous industry may rank in the bottom 60% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for ROAD and FTDR, even beyond their own solid fundamental situation.
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Shares of Construction Partners (ROAD - Free Report) have been strong performers lately, with the stock up 9.1% over the past month. The stock hit a new 52-week high of $67.21 in the previous session. Construction Partners has gained 54.4% since the start of the year compared to the 20.2% move for the Zacks Construction sector and the 16.5% return for the Zacks Building Products - Miscellaneous industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 9, 2024, Construction Partners reported EPS of $0.59 versus consensus estimate of $0.54 while it beat the consensus revenue estimate by 2.95%.
For the current fiscal year, Construction Partners is expected to post earnings of $1.43 per share on $1.85 billion in revenues. This represents a 52.13% change in EPS on a 18% change in revenues. For the next fiscal year, the company is expected to earn $1.79 per share on $2.08 billion in revenues. This represents a year-over-year change of 25.17% and 12.47%, respectively.
Valuation Metrics
Construction Partners may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Construction Partners has a Value Score of B. The stock's Growth and Momentum Scores are A and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 47.1X current fiscal year EPS estimates, which is a premium to the peer industry average of 19.4X. On a trailing cash flow basis, the stock currently trades at 27.6X versus its peer group's average of 14.9X. Additionally, the stock has a PEG ratio of 1.52. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Construction Partners currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Construction Partners passes the test. Thus, it seems as though Construction Partners shares could still be poised for more gains ahead.
How Does ROAD Stack Up to the Competition?
Shares of ROAD have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Frontdoor Inc. (FTDR - Free Report) . FTDR has a Zacks Rank of # 1 (Strong Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of B.
Earnings were strong last quarter. Frontdoor Inc. beat our consensus estimate by 27%, and for the current fiscal year, FTDR is expected to post earnings of $2.79 per share on revenue of $1.83 billion.
Shares of Frontdoor Inc. have gained 3.6% over the past month, and currently trade at a forward P/E of 17.34X and a P/CF of 17.28X.
The Building Products - Miscellaneous industry may rank in the bottom 60% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for ROAD and FTDR, even beyond their own solid fundamental situation.