Construction Partners (ROAD) Soars 6.7%: Is Further Upside Left in the Stock?

Construction Partners ROAD shares rallied 6.7% in the last trading session to close at $103.86. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 20.2% loss over the past four weeks.

Construction Partners’ shares gained on robust growth prospects, acquisition-driven expansion, optimism ahead of its fiscal third-quarter earnings and a favorable market environment following softer U.S. inflation data.

This road and highway construction company is expected to post quarterly earnings of $1.11 per share in its upcoming report, which represents a year-over-year change of +37%. Revenues are expected to be $971 million, up 24.6% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Construction Partners, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on ROAD going forward to see if this recent jump can turn into more strength down the road.

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

Construction Partners is a member of the Zacks Building Products - Miscellaneous industry. One other stock in the same industry, Quanex Building Products (NX), finished the last trading session 2.7% higher at $17.64. NX has returned 3.9% over the past month.

For Quanex, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.68. This represents a change of -1.5% from what the company reported a year ago. Quanex currently has a Zacks Rank of #5 (Strong Sell).

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

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