Knife River Corporation KNF has entered a definitive agreement to acquire Strata Corporation, a leading construction materials and contracting services provider operating in North Dakota and northwestern Minnesota. The purchase price of $454 million is based on Strata's estimated 2025 adjusted EBITDA, indicating a multiple in the high single digits.

The transaction is expected to close in the first half of 2025, subject to regulatory approvals and standard closing conditions. KNF plans to fund the acquisition using cash on hand and proceeds from issuing long-term debt.

Shares of KNF gained 5.7% during Friday’s trading session and 2.6% in the after-hour trading session.

Acquisition to Strengthen KNF's Central Segment Growth

Strata, founded in 1910, is a vertically integrated company with more than 75 aggregates locations, extensive reserves and rail assets to support its market reach. The company operates 28 ready-mix plants, three asphalt plants and a contracting division focused on asphalt paving and concrete construction.

Headquartered in Grand Forks, ND, Strata has grown from a single gravel operation into a prominent supplier of construction materials, employing more than 900 people during peak season. The acquisition is expected to strengthen KNF's position in the region and support growth in its Central Segment.

Boosting Competitive EDGE Strategy With Strata Deal

The acquisition aligns with Knife River's Competitive EDGE strategy to drive profitable growth. The company expects Strata to enhance its adjusted EBITDA margin within the first year. Strata’s high-quality assets will help expand Knife River’s service territory in a familiar region, reinforcing long-term growth prospects.

KNF’s Price Performance

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Shares of Knife River have gained 18.8% in the past three months, against the Zacks Building Products - Miscellaneous industry’s 7.3% decline. The company is benefiting from strong performance across its geographic segments, including the Pacific, Northwest, Mountain and Central regions. This success is further driven by a supportive public funding environment and the continued execution of its competitive EDGE strategy. The company has secured higher prices for its products and improved bid margins, while effectively managing projects to enhance the value of its services.

In addition, Knife River has made strategic investments, allocating nearly $130 million across six acquisitions this year. These investments, made in the final months of the year, are expected to generate revenues and EBITDA growth in 2025.

The Zacks Consensus Estimate for KNF’s 2025 sales and earnings per share (EPS) indicates an increase of 6% and 19%, respectively, from a year ago.

KNF’s Zacks Rank & Key Picks

Currently, KNF carries a Zacks Rank #4 (Sell).

Here are some better-ranked stocks from the Construction sector.

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 delivered a trailing four-quarter earnings surprise of 21.5%, on average. Shares of STRL have gained 50.8% in the past six months. The Zacks Consensus Estimate for STRL’s 2025 sales and EPS implies an increase of 7.3% and 8.1%, respectively, from the prior-year levels.

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 26.2% 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.

Comfort Systems USA, Inc. FIX currently sports a Zacks Rank of 2 (Buy). FIX delivered a trailing four-quarter earnings surprise of 14.7%, on average. The stock has gained 37.8% in the past six months.

The consensus estimate for FIX’s 2025 sales and EPS indicates an increase of 7.9% and 20.8%, respectively, from a year ago.

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