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Construction Partners, Inc. ROAD or CPI reported solid fourth-quarter fiscal 2024 (ended Sept. 30, 2024) results, with earnings and revenues surpassing the Zacks Consensus Estimate and increasing on a year-over-year basis.

Shares of the company gained 6.1% on Thursday. Owing to strong industry demand and favorable funding trends, the company raised its fiscal 2024 outlook.

Fred J. (Jule) Smith, III, CPI’s president and chief executive officer, stated, "In fiscal 2025, we continue to project growth and enhanced profitability, supported by eleven months of Lone Star's contribution in our fiscal year. The addition of Lone Star positions CPI to accelerate our ROAD-Map 2027 strategy and to deliver long-term value to our investors and other stakeholders."

Inside the CPI’s Numbers

CPI reported adjusted earnings per share (EPS) of 58 cents, which topped the Zacks Consensus Estimate of 57 cents by 1.8% but declined 1.7% year over year.

Construction Partners, Inc. Price, Consensus and EPS Surprise

Construction Partners, Inc. price-consensus-eps-surprise-chart | Construction Partners, Inc. Quote

Quarterly revenues of $538.2 million surpassed the consensus mark of $537.5 million by 0.1% and grew 13.3% year over year.

The project backlog at the end of fiscal 2024 amounted to $1.96 billion, up from the year-ago number of $1.60 billion and $1.86 billion at June 30, 2024.

Operating Highlights

The company reported gross profit of $84.1 million, up 11% from $75.5 million in the year-ago period. General and administrative expenses, as a percentage of total revenues, were 7.4%, up 50 bps from 6.9% year over year.

Adjusted EBITDA of $77 million increased 11.8% year over year. Adjusted EBITDA margin, however, declined 20 basis points to 14.3%.

CPI’s Fiscal 2024 Highlights

For the full year, CPI reported EPS of $1.31, up from 94 cents year over year. Quarterly revenues of $1.82 billion grew 16.7% year over year, led by strong operational performance throughout the Sunbelt.

Adjusted EBITDA for fiscal 2024 came in at $220.6 million, reflecting an increase of 28% from fiscal 2023. Adjusted EBITDA margin totaled 12.1%, up from 11% in fiscal 2023.

CPI’s Financials

As of Sept. 30, 2024, ROAD had cash and cash equivalents of $74.7 million, up from $48.2 million reported at the fiscal 2023-end. As of fiscal 2024-end, long-term debt (net of current maturities and deferred debt issuance costs) was $487 million, up from $360.7 million at the fiscal 2023-end.

For fiscal 2024, net cash provided by operating activities (net of acquisitions) was $209.1 million compared with $157.2 million a year ago.

Fiscal 2025 Guidance

For fiscal 2025, CPI now expects revenues in the range of $2.48-$2.58 billion, up from the prior projection of $2.42-$2.52 billion. This indicates an improvement from $1.82 billion reported in fiscal 2024.

Net income is expected to be in the range of $97-$113 million (up from the prior projection of $90-$106 million) compared with $68.9 million in fiscal 2024.

CPI now anticipates adjusted EBITDA in the range of $347-$377 million (up from the prior projection of $338-$368 million) compared with $220.6 million in fiscal 2024.

Adjusted EBITDA margin is still anticipated to be between 14% and 14.6% compared with $12.1% in fiscal 2024.

The above-mentioned guidance includes the expected results of its latest acquisition of Lone Star Paving, which is likely to be accretive from second-quarter fiscal 2025 onward.

Zacks Rank & Recent Releases

CPI currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

EMCOR Group, Inc. EME reported impressive third-quarter 2024 results, with earnings and revenues surpassing the Zacks Consensus Estimate and increasing year over year.

The upside was backed by innovation and high-demand projects, particularly in data centers, semiconductor plants, and institutional sectors. Strength across the segments helped the company achieve 12.6% higher organic revenues. The company now expects annual revenues of at least $14.5 billion compared with $14.5-$15 billion expected earlier.

MasTec, Inc. MTZ reported stellar earnings for third-quarter 2024, which handily surpassed the Zacks Consensus Estimate and increased strongly on a year-over-year basis.

However, revenues missed the analysts’ expectations and slightly declined on a year-over-year basis. MTZ posted nearly 6% lower revenues from its previously provided guidance of $3.45 billion due to near-term project delays.

Quanta Services Inc. PWR reported mixed results for the third quarter of 2024, wherein adjusted earnings beat the Zacks Consensus Estimate, but revenues missed the same.

Quanta reported a strong quarter with double-digit growth across key financial metrics, a record backlog of $34 billion and $539.5 million in free cash flow. CEO Duke Austin attributed this growth to Quanta’s diverse portfolio, high demand, effective execution and an expanding market.

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Willdan Group, Inc. WLDN has secured a three-year, $4.5 million contract with the City of Bellflower, CA, to provide building division operations and fire plan inspection services. This agreement not only strengthens Willdan’s foothold in Los Angeles County but also demonstrates its ability to deliver critical municipal services.

“We thank the City of Bellflower for selecting us,” said Mike Bieber, Willdan’s CEO. “This contract expands our work in Los Angeles County, and we’re looking forward to supporting the City’s current and future needs.”

The City of Bellflower, home to nearly 80,000 residents and 4,000 businesses, values high-quality governance and services. City manager Ryan Smoot emphasized Willdan’s expertise and collaborative approach, stating that the company will ensure a “seamless transition” in its service delivery.

Willdan’s Strategic Growth in Municipal Services

The Bellflower contract aligns with Willdan’s strategic focus. The company emphasized its commitment to expanding recurring revenue streams through long-term municipal partnerships. The contract supports Willdan’s strategy to deepen its regional presence while leveraging its reputation for efficient and personalized municipal services. During the recent earnings call, CEO Mike Bieber emphasized that municipal projects continue to be a standout segment, with double-digit organic growth and a robust outlook across state and local government clients.

Notably, third-quarter 2024 results were favorably impacted by growth in municipal engineering, project management revenues and expanded utility program management revenues. During the first nine-month period of 2024, higher activity from WLDN’s construction management projects, expanded utility programs and higher municipal engineering services resulted in a 38% increase in adjusted EBITDA to $39.1 million from a year ago. The increased adjusted EBITDA, reduced net interest expense and the lower effective tax rate enabled adjusted earnings per share (EPS) to grow 79% to $1.70 per share.

Quanta Services Inc. PWR, a leading provider of infrastructure solutions for the electric power, pipeline, and telecommunications sectors, has announced an 11.1% increase in its quarterly dividend. This move underscores the company’s confidence in its financial health and commitment to enhancing shareholder value. Let’s dive into the details and assess what this could mean for investors.

The company boosted its quarterly dividend to 10 cents per share (40 cents annually) from 9 cents (36 cents annually). The dividend will be paid on Jan. 13, 2025, to its stockholders of record as of Jan. 2. For investors, the increased payout translates to a forward annualized dividend yield of approximately 0.12% at the current stock price.

This hike reflects its confidence in the stability of the base business, long-term prospects and solid financial position. A dividend increase not only enhances shareholder returns but also raises a stock’s market value. In fact, companies often tend to attract new investors and retain the old ones through this strategy.

The stock surged 85% in the past year compared with the Zacks Engineering - R and D Services industry’s 25.7% growth. The stock has fared better than the Zacks Construction sector and the S&P 500 Index’s 41% and 30% rallies, respectively. PWR stock has a VGM Score of B, with Growth Score of A and Momentum Score of B.

A Look at Quanta’s Fundamentals

Quanta is poised for robust growth, driven by several key factors rooted in its strategic positioning, market dynamics, and operational capabilities.

The ongoing energy transition, fueled by federal and state policies, is creating unprecedented opportunities for infrastructure upgrades. Utilities are facing rising power demand for the first time in decades, driven by the proliferation of technologies like artificial intelligence and the rapid expansion of data centers. Quanta’s integration of Cupertino Electric enhances its ability to provide comprehensive solutions for data center electrification, positioning it as a critical player in meeting these evolving needs. Its diverse service portfolio, which includes renewable energy projects, grid modernization, and technology solutions, places it at the intersection of utility, renewable energy, and technology industries, a convergence that is accelerating demand for its services.

Quanta’s strategic acquisitions have been pivotal in mitigating external challenges while expanding its market capabilities. The recent purchase of a transformer manufacturing business exemplifies this approach, addressing supply chain constraints while enhancing its ability to self-perform critical components of its projects.

The company anticipates double-digit earnings per share (EPS) growth of around 20% for 2024 and continued strong performance in free cash flow and adjusted EBITDA. Net cash provided by operating activities was $739.9 million in the third quarter, up from $406.6 million a year ago. Free cash flow (FCF) in the third quarter was $539.5 million, up from $279.8 million reported in the year-ago quarter.

The company reported a 12-month backlog of $19.13 billion and a total backlog of $33.96 billion at the end of September. This compares with the December 2023-end 12-month backlog of $17.23 billion and the total backlog of $30.11 billion. In the year-ago period, the 12-month backlog stood at $17.02 billion and the total backlog at $30.1 billion. The company’s solid backlog level speaks of its ability to generate higher revenues in future.

PWR’s Zacks Rank & Key Picks

The company currently has a Zacks Rank #3 (Hold).

Here are some better-ranked stocks from the Zacks Construction sector:

Sterling Infrastructure, Inc. STRL presently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 21.5%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of STRL have gained 203.9% in the past year. The Zacks Consensus Estimate for STRL’s 2024 sales and EPS implies an increase of 9% and 33.3%, respectively, from the prior-year levels.

Louisiana-Pacific Corporation LPX currently sports a Zacks Rank of 1. LPX delivered a trailing four-quarter earnings surprise of 30.7%, on average. The stock has gained 86.8% in the past year.

The Zacks Consensus Estimate for LPX’s 2024 sales and EPS indicates an increase of 12.7% and 72.1%, 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 risen 147.7% in the past year.

The Zacks Consensus Estimate for MTZ’s 2024 sales and EPS indicates an increase of 1.9% and 84.3%, respectively, from a year ago.

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North American Construction Group Ltd. NOA has announced that its limited partnership with the Mikisew Group of Companies, Mikisew North American Limited Partnership (“MNALP”), has won a heavy civil construction contract.

Upon the announcement of the win, NOA stock inched up 0.5% during Thursday’s after-hours trading session.

Details on NOA’s New Contract

Located at one of the leading mines in the Fort McMurray region, the heavy civil infrastructure project was awarded by a major producer in the oil sands region. The scope of work for MNALP includes building large diversion ditches to redirect water from upstream catchments away from active mining areas and releasing it into downstream locations.

This two-year project is expected to commence in January 2025 and be completed in October 2026. North American Construction states that this project will help it generate approximately $125 million in revenues.

The company believes this new project builds upon a long-term partnership with the client and allows space to showcase MNALP’s technical expertise in large-scale civil construction.

North American Construction’s Contract Wins Bode Well

North American Construction provides equipment maintenance, mining and heavy construction services to the resource development and industrial construction markets in Canada, the United States and Australia. Its services include constructability reviews, budgetary cost estimates, design-build construction, project management, contract mining and equipment maintenance. In October 2023, NOA acquired MacKellar Group for a total expected consideration of $395 million. This strategic move is likely to boost the company’s prospects.

Opportunities and demand for heavy equipment in Australia are growing. New and expanding operations in Queensland and New South Wales are actively seeking contractor equipment for metallurgical and thermal coal markets. NOA is receiving contract mining and equipment rental opportunities in copper, gold, silver and iron ore.

The contract wins during the third quarter of 2024, combined with the quarterly backlog consumption, resulted in NOA’s pro forma backlog of $3.1 billion, up about $300 million from its second-quarter 2024 ending backlog. The company expects its year-end backlog to remain more than $3 billion and demonstrate increasing geographic and resource diversification.

Orion Group Holdings, Inc. ORN has secured three new contracts valued at approximately $111 million. The contracts consist of two projects in the Marine segment and one in the Concrete segment. These projects are expected to begin in 2025 and will be completed within 20 months.

The contract awards further reinforce Orion's position as a leader in the industry. The company is well-equipped to handle complex projects with its expertise and experience.

Details of ORN's New Contracts

Orion's Marine segment clinched an $88 million contract from the South Carolina State Ports Authority through a competitive bidding process. The project involves extending the Hugh K. Leatherman Terminal Wharf at the Port of Charleston. Orion will build 1,600 feet of concrete pile-supported wharf as an extension of the existing terminal. The scope includes installing precast concrete piles, caps, deck slabs and stay-in-place tubes, as well as dredging and shoreline stabilization. Construction is set to begin in the first quarter of 2025 and will take about 20 months.

The segment also secured a $12.9 million subcontract from Haskell for the West Bank Riverwalk pedestrian bridge project in Tampa, FL. The bridge will span the Hillsborough River in downtown Tampa. Its design is currently underway and construction is scheduled to begin in the third quarter of 2025. The project is expected to take approximately 18 months to complete.

The company's Concrete segment clinched a $10.3 million contract from HITT Contracting, LLC for the construction of a new data center in Garland, TX. The center is being built for a confidential hyperscaler client. Construction is expected to start in January 2025 and will span about nine months.

The new contract awards further expand Orion's project portfolio. The South Carolina State Ports Authority project highlights the growing demand for port expansion, driven by larger vessels and increased global trade. Meanwhile, the company's new data center contract highlights ORN’s solid relationships with key contractors who rely on its expertise and industry-leading safety standards.

ORN’s Share Price Performance

Shares of Orion have gained 48.2% in the past month, outperforming the Zacks Building Products - Heavy Construction industry’s 15.4% growth. The company is benefiting from the resolution of project delays and the progress of ongoing projects. Orion's pipeline of opportunities has expanded significantly, now totaling more than $13 billion as of Sept. 30, 2024.

The company is also capitalizing on the booming data center market, fueled by artificial intelligence developments. Orion’s Concrete segment, renowned for handling complex data center projects, has been seeing increased activity in the Houston and Dallas markets.

With a total backlog of $690.5 million as of Sept. 30, 2024, Orion is poised for significant growth. The company is focused on several major projects and sees strong potential ahead. Its pipeline has grown four times from $3 billion last year. This expansion is expected to boost revenue growth across diverse markets. The company anticipates a ramp-up in project activity starting in 2025, with transformational growth expected in 2026.

The Zacks Consensus Estimate for Orion’s 2024 earnings per share (EPS) has been revised upward to 10 cents from 3 cents in the past 30 days. The estimated figure indicates 128.6% year-over-year growth.

ORN’s Zacks Rank & Key Picks

Orion currently carries a Zacks Rank #3 (Hold).

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 203.9% in the past year. The Zacks Consensus Estimate for STRL’s 2024 sales and EPS implies an increase of 9% and 33.3%, respectively, from the prior-year levels.

Louisiana-Pacific Corporation LPX currently sports a Zacks Rank of 1. LPX delivered a trailing four-quarter earnings surprise of 30.7%, on average. The stock has gained 86.8% in the past year.

The Zacks Consensus Estimate for LPX’s 2024 sales and EPS indicates an increase of 12.7% and 72.1%, 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 147.7% in the past year.

The Zacks Consensus Estimate for MTZ’s 2024 sales and EPS indicates an increase of 1.9% and 84.3%, respectively, from a year ago.

Zacks Investment Research

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The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.

It also includes access to the Zacks Style Scores.

What are the Zacks Style Scores?

Developed alongside the Zacks Rank, the Zacks Style Scores are a group of complementary indicators that help investors pick stocks with the best chances of beating the market over the next 30 days.

Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.

The Style Scores are broken down into four categories:

Value Score

For value investors, it's all about finding good stocks at good prices, and discovering which companies are trading under their true value before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to help pick out the most attractive and discounted stocks.

Growth Score

Growth investors, on the other hand, are more concerned with a company's financial strength and health, and its future outlook. The Growth Style Score examines things like projected and historic earnings, sales, and cash flow to find stocks that will experience sustainable growth over time.

Momentum Score

Momentum trading is all about taking advantage of upward or downward trends in a stock's price or earnings outlook, and these investors live by the saying "the trend is your friend." The Momentum Style Score can pinpoint good times to build a position in a stock, using factors like one-week price change and the monthly percentage change in earnings estimates.

VGM Score

If you like to use all three kinds of investing, then the VGM Score is for you. It's a combination of all Style Scores, and is an important indicator to use with the Zacks Rank. The VGM Score rates each stock on their shared weighted styles, narrowing down the companies with the most attractive value, best growth forecast, and most promising momentum.

How Style Scores Work with the Zacks Rank

The Zacks Rank, which is a proprietary stock-rating model, employs earnings estimate revisions, or changes to a company's earnings expectations, to make building a winning portfolio easier.

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As mentioned above, the Scores are designed to work with the Zacks Rank, so any change to a company's earnings outlook should be a deciding factor when picking which stocks to buy.

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Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: MasTec (MTZ)

MasTec, Inc. is a leading infrastructure construction company operating mainly throughout North America. The company engages in the engineering, building, installation, maintenance and upgrade of energy, communication, utility and other infrastructure.

MTZ is a #1 (Strong Buy) on the Zacks Rank, with a VGM Score of A.

Additionally, the company could be a top pick for growth investors. MTZ has a Growth Style Score of A, forecasting year-over-year earnings growth of 84.3% for the current fiscal year.

For fiscal 2024, four analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.61 to $3.63 per share. MTZ boasts an average earnings surprise of 40.2%.

With a solid Zacks Rank and top-tier Growth and VGM Style Scores, MTZ should be on investors' short list.

Zacks Investment Research