Shares of Construction Partners, Inc. ROAD have surged 63.4% in the past six months, outperforming the Zacks Building Products - Miscellaneous industry’s 8.3% growth, the Zacks Construction sector’s 6.9% increase and the S&P 500 Index’s 10.3% rise.

Image Source: Zacks Investment Research

This civil infrastructure company benefits from its focus on the ROAD-Map 2027 goals, accretive acquisitions and a growing backlog. The robust demand environment in both commercial and public markets, driven by the optimism surrounding the favorable funding trends, is proving to be the tailwind for the company’s prospects.

The Zacks Consensus Estimate of the company’s fiscal 2025 earnings per share has moved north from $1.91 to $1.96 in the past 30 days. The estimated value indicates 47.4% year-over-year growth. Also, during the same time frame, the earnings estimates for the fiscal first quarter have moved up to 14 cents per share from 6 cents. The growth prospect is further solidified by a VGM Score of A, backed by a Growth Score of A. The positive trend signifies bullish analysts’ sentiments, robust fundamentals and prospects of an outperformance in the near term.

Although ongoing macroeconomic uncertainties and inflated cost structure are hindering prospects, the strong industry demand trends, along with other tailwinds mentioned above, are offsetting the negative flush.

Let us discuss the factors why investors must buy this Zacks Rank #2 (Buy) stock for now.

Here’s What's Driving the ROAD Stock

ROAD-Map 2027 Goals: During the latter half of fiscal 2023, Construction Partners disclosed a set of targets that it expects to achieve by fiscal 2027. The targets include annual revenue growth in the range of 15-20%, with approximately half of the growth being inorganic and the other half being organic, and EBITDA margin expansion in the range of 13-14%.

Given the ongoing opportunities for organic and inorganic growth, the company seems well-positioned to achieve these targets. During fiscal 2024, revenues increased year over year by 16.7% to $1.82 billion while the adjusted EBITDA margin expanded 110 basis points to 12.1%. The strong demand for public and private work in its existing markets aided the uptick.

Growing Backlog: Construction Partners operates across six southeastern states in the United States, offering construction services and related products for public and private projects. Due to healthy funding programs at the state, local and federal levels throughout the southeastern states, the company is witnessing strong demand for public projects. The government funding programs, including the Infrastructure Investment and Jobs Act (IIJA) along with the Federal Transportation Highway Program, are fueling the road repair, maintenance and expansion projects.

As of Sept. 30, 2024, the company’s project backlog was $1.96 billion, up from $1.60 billion in the year-ago quarter and $1.86 billion in the prior quarter. Moving into fiscal 2025, it sees areas of strength in the private market for manufacturing, corporate site development, large economic development projects and residential. The sustained demand is expected to drive project backlog growth.

Strategic Acquisitions: Construction Partners follows a profitable buyout strategy, which enhances as well as expands its product offerings and geographical reach. One of the highlighted acquisitions of the company in the calendar year 2024 was the Lone Star Paving Acquisition. On Nov. 1, 2024, it acquired Asphalt, Inc., LLC (doing business as Lone Star Paving), a vertically integrated asphalt manufacturing and paving company headquartered in Austin, TX. The acquisition brought in 10 hot mix asphalt plants, four aggregate facilities and one liquid asphalt terminal to ROAD’s portfolio. The company boosted its Texas footprint, expanded its customer base and enhanced its project pipeline with this accretive buyout.

Furthermore, during fiscal 2024, Construction Partners completed eight acquisitions for approximately $231.7 million across four states, adding to or expanding its operations in Alabama, Georgia, North Carolina and South Carolina. This resulted in it adding 11 asphalt plants and a diverse fleet of equipment and vehicles to its portfolio.

Other Key Picks

Here are other top-ranked stocks from the same sector space.

Sterling Infrastructure, Inc. STRL presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

It has a trailing four-quarter earnings surprise of 21.5%, on average. Shares of STRL have gained 46.5% in the past six months. The Zacks Consensus Estimate for STRL’s 2025 sales and earnings per share (EPS) implies an increase of 7.3% and 8.1%, respectively, from the prior-year levels.

EMCOR Group, Inc. EME currently sports a Zacks Rank of 1. EME delivered a trailing four-quarter earnings surprise of 32.3%, on average. The stock has gained 25.1% in the past six months.

The consensus estimate for EME’s 2025 sales and EPS indicates an increase of 6.6% and 7.2%, respectively, from a year ago.

MasTec, Inc. MTZ presently sports a Zacks Rank of 1. MTZ delivered a trailing four-quarter earnings surprise of 40.2%, on average. The stock has gained 26.8% in the past six months.

The Zacks Consensus Estimate for MTZ’s 2025 sales and EPS indicates an increase of 8.8% and 43.4%, respectively, from a year ago.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

EMCOR Group, Inc. (EME) : Free Stock Analysis Report

Sterling Infrastructure, Inc. (STRL) : Free Stock Analysis Report

MasTec, Inc. (MTZ) : Free Stock Analysis Report

Construction Partners, Inc. (ROAD) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research