Transaction Overview
On December 31, 2024, Geneva Capital Management LLC made a significant move by reducing its stake in Construction Partners Inc (NASDAQ: ROAD). The firm decreased its holdings by 726,429 shares, marking a -22.81% change in its position. This transaction was executed at a trade price of $88.46 per share. Following this reduction, Geneva Capital Management LLC now holds 2,458,288 shares of Construction Partners Inc, which constitutes 3.67% of the firm's portfolio and 5.20% of its holdings in the stock. The transaction had a -1.07% impact on the firm's overall portfolio.
About Geneva Capital Management LLC
Geneva Capital Management LLC is headquartered at 100 East Wisconsin Ave, Milwaukee, WI 53202. The firm manages a total equity of $5.77 billion and is known for its investments in the technology and industrial sectors. Among its top holdings are AAON Inc (AAON, Financial), ExlService Holdings Inc (EXLS, Financial), Kinsale Capital Group Inc (KNSL, Financial), RBC Bearings Inc (RBC, Financial), and Construction Partners Inc (ROAD, Financial). Although the firm's specific investment philosophy is not detailed, its diverse portfolio suggests a strategic approach to value investing.
Construction Partners Inc: Company Profile
Construction Partners Inc operates as a civil infrastructure company, primarily focusing on road construction and maintenance. The company, which went public on May 4, 2018, has a market capitalization of $4.51 billion and a current stock price of $80.62. Construction Partners Inc specializes in manufacturing and distributing hot mix asphalt, paving activities, and site development, including utility and drainage system installations. The company operates across various states in the United States, emphasizing public and private infrastructure projects.
Financial Metrics and Valuation
Construction Partners Inc is currently trading with a price-to-earnings ratio of 75.35, indicating a high valuation relative to its earnings. The stock is considered significantly overvalued with a [GF Value](https://www.gurufocus.com/term/gf-value/ROAD) of $53.67, resulting in a price to GF Value ratio of 1.51. Year-to-date, the stock has experienced a price change of -8.2%, while its price has increased by 520.15% since its IPO. The company's [GF Score](https://www.gurufocus.com/term/gf-score/ROAD) is 86/100, suggesting good outperformance potential.
Performance and Growth Indicators
Construction Partners Inc demonstrates strong growth potential with a [Growth Rank](https://www.gurufocus.com/term/rank-growth/ROAD) of 10/10. Over the past three years, the company has achieved revenue growth of 25.40%, EBITDA growth of 35.50%, and earnings growth of 51.00%. The [Profitability Rank](https://www.gurufocus.com/term/rank-profitability/ROAD) is 8/10, reflecting robust profitability metrics. However, the [Financial Strength](https://www.gurufocus.com/term/rank-balancesheet/ROAD) is moderate with a balance sheet rank of 5/10.
Market and Financial Health Indicators
Despite its growth, Construction Partners Inc faces challenges in its financial health. The company's cash to debt ratio is 0.11, and its [interest coverage](https://www.gurufocus.com/term/interest-coverage/ROAD) is 3.68, indicating limited ability to cover interest expenses. The [Altman Z score](https://www.gurufocus.com/term/zscore/ROAD) stands at 2.75, suggesting moderate financial distress risk. The company's return on equity (ROE) is 9.39%, and return on assets (ROA) is 3.45%. Additionally, the company has experienced negative growth in gross margin (-3.30%) and [Operating Margin](https://www.gurufocus.com/term/operating-margin/ROAD) (-6.80%).
Largest Guru Holding Construction Partners Inc
Leucadia National is the largest guru holding shares in Construction Partners Inc. However, the specific share percentage held by Leucadia National is not disclosed. This indicates a significant interest from prominent investors in the company's potential.
Conclusion
The recent reduction in shares of Construction Partners Inc by Geneva Capital Management LLC reflects a strategic portfolio adjustment. Despite the reduction, Construction Partners Inc remains a notable part of the firm's portfolio, accounting for 3.67% of its total holdings. The company's strong growth indicators and significant market presence continue to make it an attractive investment, although its current valuation suggests caution. Investors should consider the company's financial health and market conditions when evaluating its potential for future growth.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
