Market Overview

Construction Partners: Baird Sees Long-Term Investment Opportunity In Contractor's Stock

Construction Partners: Baird Sees Long-Term Investment Opportunity In Contractor's Stock

Shares of Construction Partners Inc (NASDAQ: ROAD) began trading on the Nasdaq May 4. The company recently announced it will release its fiscal second-quarter results June 4. 

The Analyst

Baird Equity Research's Andrew Wittmann initiated coverage of Construction Partners at Outperform with a price target of $15.

The Thesis

Construction Partners is an infrastructure pure play with a steady business that comes from exposure to predictable maintenance-related state and local transportation spending budgets, the analyst said in the Tuesday initiation note.

Baird expects 5-7-percent organic revenue growth combined with modest margin expansion and mid-teens EPS growth. In the initiation note, Wittmann named the following reasons why the stock represents a long-term investment opportunity: 

  • Relatively predictable returns, as the company generates around 70 percent of its revenue from the public sector. 
  • Construction Partners' risks do not typically include large project cost overruns or a dependence on multiple permits for construction starts, because it primarily competes against local, family-owned companies on projects with an average size of $1.7 million. 
  • The company targets markets with relatively less competition and is generally better capitalized than the competition. 
  • Acquisitions complement Construction Partners' organic strategy, Wittmann said. It has an identifiable pipeline of relationship-sourced acquisition opportunities and a management team with nearly 40 years of local market experience.

The Price Action

Construction Partners was trading lower by 1.3 percent at the time of publication Tuesday afternoon. 

Related Links:

Benzinga's Top Upgrades, Downgrades For May 29, 2018

Construction Partners, Inc. Announces Fiscal 2018 Second Quarter Earnings Release and Conference Call Schedule

Latest Ratings for ROAD

Dec 2019MaintainsOutperform
Dec 2019MaintainsOutperform
Aug 2019MaintainsStrong Buy

View More Analyst Ratings for ROAD
View the Latest Analyst Ratings

Posted-In: Andrew Wittmann Baird Equity ResearchAnalyst Color Price Target Initiation Analyst Ratings Best of Benzinga


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