Critical Contrast: Construction Partners (NASDAQ:ROAD) vs. Simpson Manufacturing (NYSE:SSD)

Construction Partners (NASDAQ:ROAD) and Simpson Manufacturing (NYSE:SSD) are both mid-cap construction companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitability and analyst recommendations.

Profitability

This table compares Construction Partners and Simpson Manufacturing’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Construction Partners	3.04%	12.24%	3.81%
Simpson Manufacturing	14.53%	17.72%	11.57%

Volatility and Risk

Construction Partners has a beta of 0.99, meaning that its stock price is 1% less volatile than the S&P 500. Comparatively, Simpson Manufacturing has a beta of 1.3, meaning that its stock price is 30% more volatile than the S&P 500.

Earnings & Valuation

This table compares Construction Partners and Simpson Manufacturing”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Construction Partners	$1.82 billion	3.91	$68.93 million	$1.37	92.80
Simpson Manufacturing	$2.23 billion	3.12	$322.22 million	$7.84	21.34

Simpson Manufacturing has higher revenue and earnings than Construction Partners. Simpson Manufacturing is trading at a lower price-to-earnings ratio than Construction Partners, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings for Construction Partners and Simpson Manufacturing, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Construction Partners	0	1	1	2	3.25
Simpson Manufacturing	0	1	1	0	2.50

Construction Partners presently has a consensus target price of $112.33, indicating a potential downside of 11.65%. Simpson Manufacturing has a consensus target price of $191.00, indicating a potential upside of 14.18%. Given Simpson Manufacturing’s higher possible upside, analysts plainly believe Simpson Manufacturing is more favorable than Construction Partners.

Insider & Institutional Ownership

94.8% of Construction Partners shares are held by institutional investors. Comparatively, 93.7% of Simpson Manufacturing shares are held by institutional investors. 16.4% of Construction Partners shares are held by company insiders. Comparatively, 0.4% of Simpson Manufacturing shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Simpson Manufacturing beats Construction Partners on 8 of the 14 factors compared between the two stocks.

About Construction Partners

Construction Partners, Inc., a civil infrastructure company, constructs and maintains roadways in Alabama, Florida, Georgia, North Carolina, South Carolina, and Tennessee. The company provides various products and services to public and private infrastructure projects, such as highways, roads, bridges, airports, and commercial and residential developments. It also engages in manufacturing and distributing hot mix asphalt (HMA) for internal use and sales to third parties in connection with construction projects; and paving activities, including the construction of roadway base layers and application of asphalt pavement. In addition, the company is involved in site development, including the installation of utility and drainage systems; mining aggregates, such as sand, gravel, and construction stones that are used as raw materials in the production of HMA; and distributing liquid asphalt cement for internal use and sales to third parties in connection with HMA production. The company was formerly known as SunTx CPI Growth Company, Inc. and changed its name to Construction Partners, Inc. in September 2017. Construction Partners, Inc. was founded in 2007 and is headquartered in Dothan, Alabama.

About Simpson Manufacturing

Simpson Manufacturing Co., Inc., through its subsidiaries, designs, engineers, manufactures, and sells structural solutions for wood, concrete, and steel connections. The company offers wood construction products, including connectors, truss plates, fastening systems, fasteners and shearwalls, and pre-fabricated lateral systems for use in light-frame construction; and concrete construction products comprising adhesives, specialty chemicals, mechanical anchors, carbide drill bits, powder actuated tools, fiber-reinforced materials, and other repair products for use in concrete, masonry, and steel construction, as well as grouts, coatings, sealers, mortars, fiberglass and fiber-reinforced polymer systems, and asphalt products for use in concrete construction repair, and strengthening and protection products. It also provides connectors and lateral products for wood framing, timber and offsite construction, structural steel construction, and cold-formed steel applications; and mechanical and adhesive anchors for concrete and masonry construction applications. In addition, the company offers engineering and design services, as well as software solutions that facilitate the specification, selection, and use of its products. It markets its products to the residential construction, light industrial and commercial construction, infrastructure construction, remodeling, and do-it-yourself markets in the United States, Canada, France, the United Kingdom, Germany, Denmark, Switzerland, Portugal, Poland, the Netherlands, Belgium, Spain, Italy, Romania, Sweden, Norway, Australia, New Zealand, China, Taiwan, and Vietnam. The company was founded in 1956 and is headquartered in Pleasanton, California.