Construction Partners (ROAD) Buys NC-Based Ferebee Corporation
Construction Partners, Inc. ROAD or CPI recently announced the completion of Charlotte, NC-based, a full-service hot-mix asphalt and paving company — Ferebee Corporation.
Ferebee provides asphalt contracting services for various public, commercial and residential projects with its three hot-mix asphalt plants, located in the greater Charlotte/Rock Hill metro area.
Fred J. (Jule) Smith, III, CPI’s president and chief executive officer, stated, "This new platform company will capitalize on opportunities from the rapid growth occurring in the greater Charlotte/Rock Hill markets and surrounding areas. Through our two platform companies in North Carolina, we are now better positioned to serve the infrastructure needs of one of the fastest growing states in the country."
Consistent with its long-established consolidation growth strategy in the Southeast, the recent move expands CPI’s top-line revenue growth, drives margin expansion and increases relative market share.
Robust Acquisitions
Construction Partners has been bolstering inorganic growth and market expansion over the last few quarters. In August 2022, ROAD announced the acquisition of Southern Asphalt, a bolt-on to its South Carolina platform, King Asphalt. This expands ROAD’s footprint into the dynamic Myrtle Beach metro area. The company has also added two hot-mix asphalt plants and more than 200 employees to serve an area that is considered as one of the fastest-growing markets in the nation, providing opportunities to bid on an attractive mix of public and commercial projects.
With the recent acquisitions and the strategic sale of Daurity Springs Quarry, the company is all set to expand operations into two fast-growing markets while maintaining its year-end leverage ratio. CPI expects both of these new operations to be accretive to earnings in fiscal year 2023.
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.
Price Movement & Earnings Prospect
Over the past six months, ROAD has gained 16.7% against the Zacks Building Products - Miscellaneous industry’s 4.2% fall. The company has been riding high on the back of 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.
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Notably, earnings estimates for fiscal 2023 reflect 53.7% year-over-year growth. The same for fiscal 2024 reflects 48.4% year-over-year growth. Further, ROAD has a long-term earnings growth rate of 39.4%, making us confident in its inherent strength.
Zacks Rank
Currently, CPI carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Construction sector are CRH plc CRH, Janus International Group, Inc. JBI and Acuity Brands, Inc. AYI.
CRH currently carries a Zacks Rank #2 (Buy). The firm manufactures cement, concrete products, aggregates, roofing, insulation and other building materials.
The company’s expected earnings growth rate for 2022 is 22.1%.
Headquartered in Temple, GA, Janus manufactures and supplies turn-key self-storage and commercial and industrial building solutions. Solid backlog levels, an impressive project pipeline, productivity improvements and commercial actions, including pricing, are expected to drive growth. The company is expected to benefit from its one-stop-shop offering with a leading market share position in self-storage doors and related design and installation services.
Janus’ earnings for 2022 are expected to rise 21%. It currently carries a Zacks Rank #2.
Acuity Brands currently sports a Zacks Rank #1. The company manufactures and distributes lighting fixtures and related components. It has been witnessing higher sales driven by product vitality in its lighting and spaces businesses, along with price increases and product and productivity improvements.
Acuity Brands has an estimated earnings growth rate of 4.1% for fiscal 2023.
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