Is Public Infrastructure Demand Driving Construction Partners' Growth?

Construction Partners, Inc. ROAD is seeing growth momentum supported by steady public infrastructure demand across its operating regions. The company’s footprint in the Sunbelt aligns with areas experiencing economic expansion and population migration, which is driving consistent investment in roads, highways and related infrastructure. Public sector activity remains a key contributor to overall project visibility, supported by ongoing funding at federal, state and local levels.

The company reported strong public contract bidding activity across its markets in the first quarter of fiscal 2026, reflecting healthy demand from government agencies. Bidding strength has been seen across eight states, and the company expects total federal, state and local contract awards to increase approximately 10% to 15% over fiscal 2026. This demand is largely supported by recurring maintenance work for state departments of transportation, cities and counties. These projects form a stable base of revenues and provide consistent opportunities across multiple local markets.

Furthermore, strong project activity contributed to a solid backlog position, reflecting continued demand from public infrastructure programs. As of Dec. 31, 2025, project backlog stood at a record $3.09 billion, reflecting a 16.2% year-over-year increase. The company noted that a large portion of near-term revenues is already supported by existing contracts, which enhances visibility.

Looking ahead, additional support may come from policy developments. Work is ongoing toward a five-year reauthorization of the surface transportation program. The company expects this program to provide a significant increase in annual funding to states through a per capita formula. This approach is expected to support timely project execution and long-term infrastructure investment.

Overall, sustained public infrastructure demand, combined with strong bidding activity and funding visibility, is playing a key role in supporting Construction Partners’ growth trajectory.

Construction Partners’ Competitive Landscape

Public infrastructure demand is supporting growth across the construction sector, with peers such as Vulcan Materials Company VMC and Granite Construction Incorporated GVA also benefiting from steady government spending. Vulcan Materials continues to see strength in aggregates and asphalt demand, driven by highway construction and state-funded road projects. The company’s vertically integrated model supports margins and positions it well to capture infrastructure-led opportunities.

Granite Construction is also benefiting from increased public investment, particularly in transportation and water infrastructure. The company has been focusing on disciplined bidding and selective project execution, which aligns with stable demand from federal and state programs.

Both Vulcan Materials and Granite Construction reflect broader industry trends, where recurring public infrastructure work provides steady revenue visibility. Similar to Construction Partners, exposure to government-funded projects and long-term infrastructure programs continues to support backlog growth and execution stability across the sector.

ROAD Stock’s Price Performance & Valuation Trend

Shares of Construction Partners have surged 47.2% in the past year, outperforming the Zacks Building Products - Miscellaneous industry, the broader Construction sector and the S&P 500 index.

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ROAD stock is currently trading at a premium compared with the industry, with a forward 12-month price-to-earnings (P/E) ratio of 31.42, as evidenced by the chart below.

Image Source: Zacks Investment Research

Earnings Estimate Revision of ROAD

ROAD’s earnings estimates for fiscal 2026 and 2027 have trended upward in the past 30 days. The revised estimates for fiscal 2026 and 2027 imply year-over-year growth of 31.4% and 26.8%, respectively.

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Construction Partners currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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