Construction Partners (ROAD) Acquires Pickens Corporation
Construction Partners, Inc. ROAD or CPI’s stock, gained 1.12% on Apr 3 after it announced the acquisition of Anderson, SC-based Pickens Construction, Inc.
Within this buyout, one hot-mix asphalt plant, related construction operations and approximately 20 employees will be integrated into CPI's South Carolina platform company, King Asphalt, Inc. Notably, the deal will expand CPI’s service market in the greater Greenville, SC, metro area.
Fred J. (Jule) Smith, III, CPI’s president and chief executive officer, said, "Today's acquisition expands our reach in the dynamic Upstate region of South Carolina, along the I-85 growth corridor between Greenville and Atlanta.”
Robust Acquisitions
Construction Partners has been bolstering inorganic growth and market expansion over the last few quarters. In December 2022, ROAD announced the completion of Charlotte, NC-based Ferebee Corporation, a full-service hot-mix asphalt and paving company, expanding ROAD’s footprint into the greater Charlotte/Rock Hill metro area.
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In August 2022, ROAD announced the acquisition of Southern Asphalt, a bolt-on to its South Carolina platform, King Asphalt, expanding ROAD’s footprint into the dynamic Myrtle Beach metro area.
With the recent acquisitions and the strategic sale of Daurity Springs Quarry, the company is set to expand operations into fast-growing markets while maintaining its leverage ratio.
Construction Partners’ organic and inorganic growth opportunities in the attractive Southeastern U.S. road construction/repair market are expected to help the company generate higher revenues.
Over the past six months, ROAD has underperformed in the Zacks Building Products - Miscellaneous industry. Nonetheless, earnings estimates for fiscal 2023 moved north in the past 60 days, reflecting analysts’ optimism for its growth potential. Earnings estimates for fiscal 2023 reflect 56.1% year-over-year growth. The same for fiscal 2024 reflects 39.1% year-over-year growth. Further, ROAD has a long-term earnings growth rate of 35.9%, making us confident in its inherent strength.
The company has been riding high on solid demand for infrastructure services throughout end markets in both the private and public sectors, consistent execution of its business model, and a growth strategy that defies labor, inflation and supply-chain challenges.
Zacks Rank
Currently, CPI carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the same space are:
Installed Building Products, Inc. IBP: The company is a leading installer of insulation and complementary building products. It primarily banks on a robust pipeline of acquisition opportunities across multiple geographies, products and end markets.
Installed Building’s earnings for 2023 are expected to decline 5.7%. Nonetheless, the same has moved north in the past 60 days, reflecting analysts’ optimism for its growth potential. It currently sports a Zacks Rank #1.
Simpson Manufacturing Co., Inc. SSD: The company designs, engineers and manufactures high-quality wood and concrete building construction products designed to make structures safer and more secure that perform at high levels. It has been benefiting from product price increases and key growth initiatives.
Simpson’s earnings for 2023 are expected to decrease by 16.8%. Nonetheless, the same has moved north in the past 60 days, reflecting analysts’ optimism for its growth potential. It currently sports a Zacks Rank #1.
CRH plc CRH: CRH manufactures cement, concrete products, aggregates, roofing, insulation and other building materials. Through its subsidiaries, CRH operates in Ireland, the United States, the United Kingdom, Spain, Germany and the Netherlands.
CRH plc’s expected earnings growth for 2023 is 6.6%. The rate has improved by 11 cents in the past 60 days. CRH currently has a Zacks Rank #2 (Buy).
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