Construction Partners trades at $122.02 and has moved in lockstep with the market. Its shares have returned 12.6% over the last six months while the S&P 500 has gained 12.4%.
Is ROAD a buy right now? Find out in our full research report, it’s free.
Why Are We Positive on ROAD?
Founded in 2001, Construction Partners (NASDAQ: ROAD) is a civil infrastructure company that builds and maintains roads, highways, and other infrastructure projects.
1. Skyrocketing Revenue Shows Strong Momentum
Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Construction Partners’s 32% annualized revenue growth over the last five years was incredible. Its growth beat the average industrials company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Construction Partners’s EPS grew at an astounding 27.4% compounded annual growth rate over the last five years. This performance was better than most industrials businesses.
3. Increasing Free Cash Flow Margin Juices Financials
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, Construction Partners’s margin expanded by 7.4 percentage points over the last five years. The company’s improvement shows it’s heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. Construction Partners’s free cash flow margin for the trailing 12 months was 6.7%.
Final Judgment
These are just a few reasons why we think Construction Partners is an elite industrials company, but at $122.02 per share (or 37.7× forward P/E), is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More Than Construction Partners
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