Construction Partners Inc

Construction Partners raised its fiscal 2026 guidance for the second time this year after reporting third-quarter revenue of $999.4 million, up 28.2% year-over-year, and a record project backlog of $3.36 billion. Adjusted EBITDA rose 24% to $163 million, with net income of $59.6 million and adjusted EPS of $1.08. The company cited 8.9% organic growth and 19.3% from acquisitions, and highlighted a growing data center vertical with over $100 million in Texas pipeline and more than $230 million in Oklahoma work. Gross margin slipped slightly to 16.8% from 16.9% a year earlier, and the company added a $300 million incremental term loan while expanding its revolver to $700 million. Management also noted uncertainty around federal transportation funding as the legislative calendar tightens ahead of midterms.

Construction Partners reported third-quarter fiscal 2026 revenue of $999.4 million, up 28.2% from $779.3 million, and raised its full-year guidance. Adjusted EBITDA rose 23.8% to $163.0 million, while adjusted net income increased 34% to $60.6 million, or $1.08 per diluted share. The company's project backlog reached a record $3.36 billion at June 30, 2026, with 80% to 85% of next-12-month contract revenue covered. Fiscal 2026 revenue guidance was raised to $3.64 billion to $3.68 billion, and adjusted EBITDA guidance to $559.0 million to $569.0 million, reflecting third-quarter outperformance and the Ellsworth Construction acquisition. Management highlighted a $130 million Oklahoma data center pipeline and a $100 million Texas data center pipeline, and noted that approximately 45% of IIJA funding remains available for deployment.

Molina Healthcare will replace National Storage Affiliates Trust in the S&P MidCap 400, while Construction Partners will take Molina's place in the S&P SmallCap 600, with both changes effective before the market opens on July 22, S&P Dow Jones Indices said. The reshuffle follows Public Storage's acquisition of National Storage Affiliates Trust, which is expected to close on or around that date, subject to customary closing conditions. Construction Partners shares rose 2.5% premarket.

StockStory identifies Construction Partners as a growth stock set to flourish, while recommending investors sell Marqeta and Redwire. Construction Partners, a civil infrastructure company, posted 48.8% one-year revenue growth and a 39.9% annual revenue growth rate over the last two years, with earnings per share rising 46.7% annually and free cash flow margin expanding by 7.4 percentage points over five years. In contrast, Marqeta’s 6.3% annual growth lagged typical software companies, its operating margin fell 5.3 percentage points, and it faces a highly competitive environment. Redwire, a space infrastructure provider, saw its free cash flow margin shrink by 14 percentage points over five years and carries historically negative earnings per share along with an unfavorable liquidity position.

Zacks Equity Research has identified United Rentals, Argan, Simpson Manufacturing, Everus Construction Group and Construction Partners as five building product stocks well-positioned to navigate industry headwinds. The Zacks Building Products - Miscellaneous industry, a 35-stock group within the broader Zacks Construction sector, currently carries a Zacks Industry Rank of 170, placing it in the bottom 31% of more than 250 Zacks industries. The industry faces pressure from elevated input costs, tariff-related uncertainty, high interest rates and housing affordability challenges, but sustained investment in infrastructure, power, grid modernization, data centers and advanced manufacturing is supporting healthy project pipelines. Resilient repair and remodeling activity and demand for premium, energy-efficient products are also helping companies maintain pricing power. Among the five highlighted stocks, Argan and Everus hold a Zacks Rank of 1, or Strong Buy, while United Rentals, Simpson and Construction Partners carry a Zacks Rank of 2, or Buy.

StockStory highlights Construction Partners as a cash-producing stock with exciting potential, while advising investors to brush off RTX and West Pharmaceutical Services. Construction Partners, trading at $123.14 per share, posted annual revenue growth of 39.9% over the last two years and earnings per share growth of 46.7%, with its free cash flow margin expanding by 7.4 percentage points over five years. RTX, at $185.63 per share, faces slowing demand with estimated sales growth of 5.9% and a low return on capital of 4.7%. West Pharmaceutical Services, at $336.34 per share, saw unexciting 4.9% annual sales growth and a 5.8 percentage point decline in adjusted operating margin over five years amid rising competition.

Construction Partners, Inc. trades at a forward 12-month price-to-sales ratio of 34.37 times, well above the Zacks Building Products - Miscellaneous industry average of 18.91 times, raising debate over whether its growth justifies the premium. The company reported a record backlog of $3.14 billion, with 80 to 85 percent of next-12-month contract revenues already covered, and raised its fiscal 2026 revenue outlook to between $3.59 billion and $3.65 billion. Second-quarter fiscal 2026 revenues rose 35 percent year over year, adjusted EBITDA increased 35 percent, and organic growth was 11 percent. The Zacks Consensus Estimate for fiscal 2026 earnings has risen to $2.95 per share from $2.89 over the past 60 days, while the fiscal 2027 estimate increased to $3.72 from $3.66. The company continues to expand through acquisitions, completing its fourth deal of fiscal 2026 and 17th since fiscal 2024, and benefits from commercial demand tied to data centers, warehouses, and reindustrialization projects.

Construction Partners has posted a 32% annualized revenue growth rate over the past five years, significantly outpacing the average industrials company. Its earnings per share grew at a 27.4% compounded annual rate over the same period, while free cash flow margin expanded by 7.4 percentage points, reaching 6.7% on a trailing 12-month basis. The stock has returned 12.6% over the last six months, roughly in line with the S&P 500’s 12.4% gain, and currently trades at $122.02 per share, or 37.7 times forward earnings.