Construction Partners, Inc. (ROAD) Stock Analysis and Metrics

Sector: Industrials Industry: Engineering & Construction CIK: 0001718227

P/B 6.64

P/E 59.50

P/S 2.15

Market Cap 6.06 Bn

ROIC (Qtr) 6.85

Div Yield % 0.00

Rev 1y % (Qtr) 67.21

Total Debt (Qtr) 1.69 Bn

Debt/Equity (Qtr) 1.85

About

Construction Partners, Inc., a Delaware corporation and often referred to as ROAD, is a civil infrastructure company that specializes in the construction and maintenance of roadways across Alabama, Florida, Georgia, North Carolina, South Carolina, and Tennessee. The company operates through its wholly-owned subsidiaries, providing a variety of products and services to both public and private infrastructure projects, with an emphasis on highways, roads, bridges, airports, and commercial and residential developments. Construction Partners' main business...

Construction Partners, Inc., a Delaware corporation and often referred to as ROAD, is a civil infrastructure company that specializes in the construction and maintenance of roadways across Alabama, Florida, Georgia, North Carolina, South Carolina, and Tennessee. The company operates through its wholly-owned subsidiaries, providing a variety of products and services to both public and private infrastructure projects, with an emphasis on highways, roads, bridges, airports, and commercial and residential developments.

Construction Partners' main business activities revolve around the construction and maintenance of roadways. They offer a range of products and services, including hot mix asphalt (HMA), paving activities, site development, mining aggregates, and distributing liquid asphalt cement. These offerings cater to the needs of various customers, which include state departments of transportation (DOTs), local municipalities, and private developers.

The company generates revenue primarily from its product and service offerings. Its primary products include HMA, which is used for constructing and maintaining roadways, and liquid asphalt cement, used for binding the aggregates together. Services include paving activities and site development for infrastructure projects, as well as mining aggregates for construction purposes.

In the competitive landscape of the highway and road construction industry, Construction Partners maintains a strong position. The industry is characterized by a high level of competition, with multiple competitors operating in the markets where the company operates. However, Construction Partners has several competitive advantages. One such advantage is its vertical integration strategy, which allows it to manufacture and distribute HMA for both internal use and sales to third parties. This strategy provides the company with greater control over its supply chain and the ability to adjust to market fluctuations. Additionally, the company's ability to provide a wide range of construction products and services further strengthens its competitive position.

Some of the company's largest customers include state DOTs, with the Florida DOT and North Carolina DOT accounting for significant portions of its revenues. Other notable customers include local municipalities and private developers.

Construction Partners has a diverse range of brand names and trade names for its products and services. These include, but are not limited to, its hot mix asphalt product, branded as "RoadBuilders Hot Mix Asphalt", and its paving activities, operating under the name "RoadBuilders Paving". The company's site development services are offered under the brand "SiteWorks by Construction Partners", and its mining aggregates business operates as "Aggregates by Construction Partners".

Stock Price Chart

Analysis

Pros

Healthy cash reserves of 159.01M provide 2.72x coverage of short-term debt 58.37M, demonstrating strong liquidity position and minimal refinancing risk.
Tangible assets of 2.22B provide exceptional 17.14x coverage of deferred revenue 129.30M, showing strong service capability backing.
Robust tangible asset base of 2.22B provides 6.28x coverage of working capital 352.78M, indicating strong operational backing.
Tangible assets of 2.22B provide robust 9.26x coverage of other current liabilities 239.46M, indicating strong asset backing.
Operating cash flow of 291.30M provides strong 19.43x coverage of operating expenses 14.99M, showing operational efficiency.

Cons

Operating cash flow of 291.30M barely covers its investment activities of (1.28B), with a coverage ratio of -0.23, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
Cash reserves of 159.01M provide limited coverage of acquisition spending of (1.16B), which is -0.14x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
High receivables of 595.22M relative to inventory of 155.13M (3.84 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
Operating earnings of 224.88M show weak coverage of depreciation charges of 148.27M, with a 1.52 ratio indicating high capital intensity and potential reinvestment needs.
High depreciation of 148.27M relative to operating cash flow of 291.30M, which is 0.51x suggests significant maintenance capital requirements affecting free cash flow.

Peer Comparison

Companies in the Engineering & Construction

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	PWR	Quanta Services, Inc.	65.02 Bn	63.86	2.39	6.02 Bn
2	FER	Ferrovial SE	48.37 Bn	14.34	5.08	-
3	FIX	Comfort Systems Usa Inc	34.25 Bn	40.89	4.12	0.39 Bn
4	EME	EMCOR Group, Inc.	28.27 Bn	25.01	1.74	0.42 Bn
5	MTZ	Mastec Inc	17.18 Bn	51.88	1.25	2.77 Bn
6	APG	APi Group Corp	16.45 Bn	105.48	2.15	3.05 Bn
7	J	Jacobs Solutions Inc.	16.43 Bn	56.79	1.37	2.71 Bn
8	ACM	Aecom	13.10 Bn	23.31	0.81	3.23 Bn

Industry Comparisons

Current Valuation

Metric	Value	Industry
EV to Assets	2.30	1.60
EV to Cash from Ops.	25.55	6.21
EV to Debt	4.41	12.02
EV to EBIT	33.09	16.63
EV to EBITDA	19.95	13.11
EV to Free Cash Flow [EV/FCF]	43.48	64.21
EV to Market Cap	1.23	1.27
EV to Revenue	2.65	1.63
Price to Book Value [P/B]	6.64	5.92
Price to Earnings [P/E]	59.50	28.08

Dividend Metrics

Metric	Value	Industry
Dividend Coverage Ratio	0.00	2.56
Dividend Payout Ratio %	0.00	17.64
Dividend per Basic Share	0.00	0.24
FCF Dividend Payout Ratio %	0.00	8.25
Interest Coverage	2.49	80.17

Growth Metrics

Metric	Value	Industry
Capex Growth (1y) %	-62.66	-167.27
Cash and Equivalents Growth (1y) %	107.36	637.93
Dividend Growth (1y) %	0.00	2.92
EBIAT Growth (1y) %	104.48	92.73
EBITDA Growth (1y) %	82.74	8.03
EBIT Growth (1y) %	102.29	85.41
EBT Growth (1y) %	46.07	42.19
EPS Growth (1y) %	39.10	43.98
FCF Growth (1y) %	26.58	-20.57
Gross Profit Growth (1y) %	70.02	32.55

Liquidity Ratios

Metric	Value	Industry
Asset Utilization Ratio	0.87	1.14
Cash Payout Ratio	0.00	0.05
Cash Ratio	0.27	0.38
Current Ratio	1.61	1.54
Debt to Equity Ratio	1.85	0.89
Interest Cover Ratio	2.49	80.17
Times Interest Earned	2.49	80.17

Profitability

Metric	Value	Industry
EBITDA Margin %	13.30	0.40
EBIT Margin %	8.00	-2.30
EBT Margin %	4.78	-4.58
Gross Margin %	15.60	20.40
Net Profit Margin %	3.60	-5.95

Construction Partners, Inc. (NASDAQ: ROAD)