Should Value Investors Buy Construction Partners (ROAD) Stock?
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company value investors might notice is Construction Partners (ROAD). ROAD is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
We also note that ROAD holds a PEG ratio of 0.63. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ROAD's industry has an average PEG of 1.10 right now. Over the last 12 months, ROAD's PEG has been as high as 1.85 and as low as 0.61, with a median of 0.97.
Investors should also recognize that ROAD has a P/B ratio of 3.81. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. ROAD's current P/B looks attractive when compared to its industry's average P/B of 4. Within the past 52 weeks, ROAD's P/B has been as high as 3.98 and as low as 2.84, with a median of 3.24.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. ROAD has a P/S ratio of 1.23. This compares to its industry's average P/S of 1.45.
Finally, investors should note that ROAD has a P/CF ratio of 17.35. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 17.72. ROAD's P/CF has been as high as 20.27 and as low as 13.60, with a median of 16.52, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Construction Partners is likely undervalued currently. And when considering the strength of its earnings outlook, ROAD sticks out at as one of the market's strongest value stocks.
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Construction Partners, Inc. (ROAD) : Free Stock Analysis Report
