Back to top

Image: Bigstock

What to Expect From Construction Partners (ROAD) Q1 Earnings

Read MoreHide Full Article

Construction Partners, Inc. (ROAD - Free Report) is set to report first-quarter fiscal 2021 results on Feb 5, after the closing bell.

In the last reported quarter, the company’s earnings outpaced the Zacks Consensus Estimate by 13.3% but revenues missed the same by 1%. In fact, its earnings topped the consensus mark in two of the trailing four quarters, missed once and met on the another occasion, delivering an average negative surprise of 2.9%.

Trend in Estimate Revision

For the quarter to be reported, the Zacks Consensus Estimate for earnings has increased to 10 cents from 9 cents per share over the past 60 days. The estimated figure indicates a decrease of 9.1% from 11 cents per share reported in the year-ago quarter. Nonetheless, the consensus estimate for revenues is pegged at $202.8 million, suggesting 15.7% year-over-year growth.

Factors That Might Influence Quarterly Results

Construction Partners’ organic and inorganic growth opportunities in the attractive southeastern U.S. road construction/repair market are expected to have helped the company generate higher revenues in the fiscal first quarter. Favorable project demand in the markets served and higher state funding to support infrastructure projects are expected to have acted as growth catalysts in the to-be-reported quarter. During fourth-quarter fiscal 2020 earnings call, it highlighted that nearly half of the revenue growth for fiscal 2021 will be from acquisitions and the rest from organic growth.

Meanwhile, acquisitions during fiscal 2020 are likely to have benefited Construction Partners in the quarter to be reported. In December 2020, the company acquired R.P.C. Contracting, Inc., an asphalt and paving contractor based in Kitty Hawk, NC. The transaction added two hot-mix asphalt plants to the company's North Carolina footprint. Construction Partners also acquired Gelder & Associates, Inc., an asphalt and paving contractor with a hot-mix asphalt plant located in Raleigh, North Carolina. Again, in November 2020, it acquired Rose Brothers Paving Company, Inc., an asphalt and paving contractor based in Ahoskie, NC. The transaction added six hot-mix asphalt plants in eastern North Carolina, providing the company with access to additional markets and expanding its footprint in the state.

As of Sep 30, 2020, project backlog was $608.1 million. Of this amount, 90% is expected to be completed during this fiscal year. The company’s healthy backlog is expected to have driven revenues in the quarter.

Overall, its competitive advantages — comprising vertically integrated operations, scale, strong position in hot mix asphalt production, a robust backlog, and strong growth via organic and acquisition strategies — are likely to aid fiscal first-quarter results.

However, higher general and administrative expenses, along with additional interest expense are expected to reflect in the profit level. The increase in general and administrative expenses was mainly due to the acquisitions completed during the quarter, along with growth in management personnel payroll and higher stock-based compensation cost.

Here is What Our Quantitative Model Predicts

Our proven model does not conclusively predict an earnings beat for Construction Partners in the to-be-reported quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Construction Partners currently carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Here are some companies in the Zacks Construction sector, which according to our model, have the right combination of elements to post an earnings beat in their respective quarters to be reported.

AECOM (ACM - Free Report) has an Earnings ESP of +5.88% and a Zacks Rank #2.

Century Communities, Inc. (CCS - Free Report) has an Earnings ESP of +2.09% and a Zacks Rank #2.

Masco Corporation (MAS - Free Report) has an Earnings ESP of +0.17% and a Zacks Rank #3.

Zacks Names “Single Best Pick to Double

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research SherazMian hand-picks one to have the most explosive upside of all.

You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>