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Construction Partners (ROAD) Gains As Market Dips: What You Should Know

Zacks Equity Research

Construction Partners (ROAD) closed at $15.20 in the latest trading session, marking a +1.81% move from the prior day. This change outpaced the S&P 500's 0.53% loss on the day. Elsewhere, the Dow lost 0.47%, while the tech-heavy Nasdaq lost 1%.

Prior to today's trading, shares of the road and highway construction company had gained 3.68% over the past month. This has outpaced the Construction sector's gain of 1.71% and the S&P 500's gain of 2.68% in that time.

Investors will be hoping for strength from ROAD as it approaches its next earnings release, which is expected to be August 8, 2019. The company is expected to report EPS of $0.30, up 3.45% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $230.51 million, up 18.16% from the year-ago period.

ROAD's full-year Zacks Consensus Estimates are calling for earnings of $0.83 per share and revenue of $800.61 million. These results would represent year-over-year changes of -3.49% and +17.72%, respectively.

Any recent changes to analyst estimates for ROAD should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. ROAD is holding a Zacks Rank of #2 (Buy) right now.

Looking at its valuation, ROAD is holding a Forward P/E ratio of 18.08. Its industry sports an average Forward P/E of 16.28, so we one might conclude that ROAD is trading at a premium comparatively.

Investors should also note that ROAD has a PEG ratio of 1.81 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ROAD's industry had an average PEG ratio of 1.55 as of yesterday's close.

The Building Products - Miscellaneous industry is part of the Construction sector. This group has a Zacks Industry Rank of 42, putting it in the top 17% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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