Looking back on construction and maintenance services stocks' Q1 earnings, we examine this quarter's best and worst performers, including Construction Partners (NASDAQ:ROAD) and its peers.
Construction and maintenance services companies not only boast technical know-how in specialized areas but also may hold special licenses and permits. Those who work in more regulated areas can enjoy more predictable revenue streams - for example, fire escapes need to be inspected every five years–. More recently, services to address energy efficiency and labor availability are also creating incremental demand. But like the broader industrials sector, construction and maintenance services companies are at the whim of economic cycles as external factors like interest rates can greatly impact the new construction that drives incremental demand for these companies’ offerings.
The 10 construction and maintenance services stocks we track reported an ok Q1; on average, revenues were in line with analyst consensus estimates. Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. The start of 2024 has been a different story as mixed signals have led to market volatility, but construction and maintenance services stocks have performed well, with the share prices up 11.7% on average since the previous earnings results.
Construction Partners (NASDAQ:ROAD) Founded in 2001, Construction Partners (NASDAQ:ROAD) is a civil infrastructure company that builds and maintains roads, highways, and other infrastructure projects.
Construction Partners reported revenues of $371.4 million, up 14.3% year on year, in line with analysts' expectations. Overall, it was a solid quarter for the company with an impressive beat of analysts' organic revenue estimates and full-year revenue guidance beating analysts' expectations.
Fred J. (Jule) Smith, III, the Company's President and Chief Executive Officer, said, "We are pleased to report a strong second quarter in the slowest winter quarter of our seasonal business, achieving year-over-year growth in revenue, gross profit and gross profit margin, Adjusted EBITDA and Adjusted EBITDA margin. In addition, we grew our project backlog to $1.79 billion as of March 31, 2024. Our continued revenue and backlog growth reflects the strong ongoing demand and funding environment for both public and private infrastructure projects across our geographic footprint. Because of our confidence in these sustained industry trends, strong operational performance across our 70 markets in the Southeast, and continued infrastructure tailwinds, we are raising our outlook for fiscal 2024."
Construction Partners achieved the highest full-year guidance raise of the whole group. The stock is up 10.3% since reporting and currently trades at $59.38.
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Best Q1: Great Lakes Dredge & Dock (NASDAQ:GLDD) Founded as Lydon & Drews dredging company, Great Lakes Dredge & Dock (NASDAQ:GLDD) provides dredging services, land reclamation, and coastal protection projects in the United States and internationally.
Great Lakes Dredge & Dock reported revenues of $198.7 million, up 25.7% year on year, outperforming analysts' expectations by 13.2%. It was an incredible quarter for the company with an impressive beat of analysts' earnings estimates.
Great Lakes Dredge & Dock scored the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 28.7% since reporting. It currently trades at $9.07.
Weakest Q1: Matrix Service (NASDAQ:MTRX) Founded in Oklahoma, Matrix Service Company (NASDAQ: MTRX) provides engineering, fabrication, construction, and maintenance services primarily to the energy and industrial markets.
Matrix Service reported revenues of $166 million, down 11.2% year on year, falling short of analysts' expectations by 15%. It was a weak quarter for the company with a miss of analysts' earnings estimates.
Matrix Service had the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 14.3% since the results and currently trades at $10.15.
Comfort Systems (NYSE:FIX) Having historically grown through organic means as well as acquisitions of numerous peers and competitors, Comfort Systems USA (NYSE:FIX) provides mechanical and electrical contracting services.
Comfort Systems reported revenues of $1.54 billion, up 30.8% year on year, surpassing analysts' expectations by 4.8%. Revenue aside, it was an incredible quarter for the company with an impressive beat of analysts' backlog sales and earnings estimates.
Comfort Systems scored the fastest revenue growth among its peers. The stock is down 2.9% since reporting and currently trades at $302.65.
WillScot Mobile Mini (NASDAQ:WSC) Originally focusing on mobile offices for construction sites, WillScot (NASDAQ:WSC) provides ready-to-use temporary spaces, largely for longer-term lease.
WillScot Mobile Mini reported revenues of $587.2 million, up 3.8% year on year, surpassing analysts' expectations by 1.1%. Overall, it was a slower quarter for the company with underwhelming EBITDA guidance for the full year and a miss of analysts' earnings estimates.
WillScot Mobile Mini had the weakest full-year guidance update among its peers. The stock is up 9.8% since reporting and currently trades at $41.31.
This content was originally published on Stock Story
