Asphalt Paving Stock Hits A Road Bump

Construction Partners (ROAD) pulled back amid recent stock market weakness after several weeks of trading sideways and flirting with a prior buy point. The IBD Sector Leaders name soared after the asphalt company reported a beat-and-raise quarter in early February.

Construction Partners owns and operates 13 local asphalt-focused infrastructure companies. The IBD 50 and IBD Leaderboard watchlist name formed a first-stage cup base that began in September.

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The company builds, repairs and maintains highways, roads, runways, bridges and commercial sites. It serves eight states in the Sunbelt region with an emphasis on fast-growing Texas and Florida. It completed two strategic acquisitions in Daytona Beach, Florida, and Houston during the fourth quarter, and another in Houston on Feb. 2.

The majority of its business comes from publicly funded projects. It sees a large addressable market, as 94% of U.S. roads are made with asphalt and are considered in poor condition with an average road grade of D+, according to its October analyst day presentation.

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Construction Stock Takes A Detour

On Feb. 5, Construction stock soared 11.2% in heavy volume after the industrial company handily beat fiscal first-quarter earnings and sales estimates. Shares broke out of an early-stage cup base with a 138.90 buy point on Feb. 12, but the breakout faded, as did several further attempts.

The industrial stock undercut its short-term 21-day exponential moving average in Thursday’s 7.6% drop. The stock was testing its 10-week moving average early Friday, according to MarketSurge chart analysis.

A pullback and bounce off the 10-week line could offer a buying opportunity. But note that amid recent volatility, new buys could have added risk.

Construction Partners stock has an IBD Accumulation/Distribution Rating of B+, indicating fairly heavy institutional buying over the last 13 weeks.

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Company Lays Out 2030 Target

Construction Partners said first-quarter earnings grew 88% to 47 cents per share on sales that climbed 44% to $809.5 million.

And the quarter ended with a record project backlog of $3.09 billion. Construction Partners highlighted macro trends in commercial projects, including the “continued build out of AI infrastructure,” as a key driver of growth. One project is a Texas facility for powering area data centers for “one of the Magnificent Seven” megacap technology companies, it said.

“(We) don’t travel around and specialize in data centers, but they’re a big part of what we do,” Construction Partners Chief Financial Officer Gregory Hoffman said during the company’s earnings call in February.

The company raised its fiscal 2026 revenue range to $3.48 billion to $3.56 billion, with organic growth of approximately 7% to 8%. It also set a goal of reaching $6 billion in sales by 2030.

Analysts now see its full-year 2026 profit rising 32% to $2.91 per share. And 2027 forecasts call for earnings of $3.63 per share, or a 25% increase, with sales rising 10%.

The company holds top-notch IBD Composite and Earnings Per Share Ratings of 99 each.

Follow Kimberley Koenig for more stock market news on X, the platform formerly known as Twitter, @IBD_KKoenig.

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