Construction Partners Debt
| ROAD Stock | USD 101.28 1.30 1.30% |
Construction Partners holds a debt-to-equity ratio of 0.847. At present, Construction Partners' Net Debt is projected to increase significantly based on the last few years of reporting. The current year's Long Term Debt is expected to grow to about 435.6 M, whereas Short Term Debt is forecasted to decline to about 15.6 M. . Construction Partners' financial risk is the risk to Construction Partners stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Construction Partners' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Construction Partners' cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the Company is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Construction Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Construction Partners' stakeholders.
For most companies, including Construction Partners, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Construction Partners, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Construction Partners' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book 9.7028 | Book Value 10.48 | Operating Margin 0.0886 | Profit Margin 0.0401 | Return On Assets 0.0552 |
Construction |
Construction Partners Bond Ratings
Construction Partners financial ratings play a critical role in determining how much Construction Partners have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for Construction Partners' borrowing costs.| Piotroski F Score | 7 | Strong | View |
| Beneish M Score | (4.47) | Unlikely Manipulator | View |
Construction Partners Debt to Cash Allocation
Many companies such as Construction Partners, eventually find out that there is only so much market out there to be conquered, and adding the next product or service is only half as profitable per unit as their current endeavors. Eventually, the company will reach a point where cash flows are strong, and extra cash is available but not fully utilized. In this case, the company may start buying back its stock from the public or issue more dividends.
Construction Partners currently holds 390.73 M in liabilities with Debt to Equity (D/E) ratio of 0.85, which is about average as compared to similar companies. Construction Partners has a current ratio of 1.87, which is within standard range for the sector. Note, when we think about Construction Partners' use of debt, we should always consider it together with its cash and equity.Construction Partners Total Assets Over Time
Construction Partners Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Construction Partners uses debt to finance its assets. It includes both long-term and short-term borrowings maturing within one year. It also includes both tangible and intangible assets, such as goodwill.Construction Partners Debt Ratio | 17.0 |
Construction Partners Corporate Bonds Issued
Most Construction bonds can be classified according to their maturity, which is the date when Construction Partners has to pay back the principal to investors. Maturities can be short-term, medium-term, or long-term (more than ten years). Longer-term bonds usually offer higher interest rates but may entail additional risks.
Construction Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Construction Partners Use of Financial Leverage
Construction Partners' financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Construction Partners' total debt position, including all outstanding debt obligations, and compares it with Construction Partners' equity. Financial leverage can amplify the potential profits to Construction Partners' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Construction Partners is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 449.3 M | 471.8 M | |
| Net Debt | 393.9 M | 413.5 M | |
| Long Term Debt | 414.9 M | 435.6 M | |
| Long Term Debt Total | 417.5 M | 438.4 M | |
| Short and Long Term Debt | 17.2 M | 13.4 M | |
| Short Term Debt | 22.6 M | 15.6 M | |
| Debt To Equity | 0.66 | 0.34 | |
| Debt To Assets | 0.28 | 0.17 | |
| Net Debt To EBITDA | 1.96 | 2.06 | |
| Interest Debt Per Share | 6.87 | 7.21 | |
| Long Term Debt To Capitalization | 0.37 | 0.21 | |
| Total Debt To Capitalization | 0.38 | 0.22 | |
| Debt Equity Ratio | 0.66 | 0.34 | |
| Debt Ratio | 0.28 | 0.17 | |
| Cash Flow To Debt Ratio | 0.48 | 0.77 |
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Analyzing currently trending equities could be an opportunity to develop a better portfolio based on different market momentums that they can trigger. Utilizing the top trending stocks is also useful when creating a market-neutral strategy or pair trading technique involving a short or a long position in a currently trending equity.When determining whether Construction Partners is a strong investment it is important to analyze Construction Partners' competitive position within its industry, examining market share, product or service uniqueness, and competitive advantages. Beyond financials and market position, potential investors should also consider broader economic conditions, industry trends, and any regulatory or geopolitical factors that may impact Construction Partners' future performance. For an informed investment choice regarding Construction Stock, refer to the following important reports:Check out the analysis of Construction Partners Fundamentals Over Time. For information on how to trade Construction Stock refer to our How to Trade Construction Stock guide.You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Is Construction & Engineering space expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Construction Partners. If investors know Construction will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Construction Partners listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth 0.439 | Earnings Share 1.31 | Revenue Per Share 33.93 | Quarterly Revenue Growth 0.227 | Return On Assets 0.0552 |
The market value of Construction Partners is measured differently than its book value, which is the value of Construction that is recorded on the company's balance sheet. Investors also form their own opinion of Construction Partners' value that differs from its market value or its book value, called intrinsic value, which is Construction Partners' true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Construction Partners' market value can be influenced by many factors that don't directly affect Construction Partners' underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Construction Partners' value and its price as these two are different measures arrived at by different means. Investors typically determine if Construction Partners is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Construction Partners' price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.
What is Financial Leverage?
Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In most cases, the debt provider will limit how much risk it is ready to take and indicate a limit on the extent of the leverage it will allow. In the case of asset-backed lending, the financial provider uses the assets as collateral until the borrower repays the loan. In the case of a cash flow loan, the general creditworthiness of the company is used to back the loan. The concept of leverage is common in the business world. It is mostly used to boost the returns on equity capital of a company, especially when the business is unable to increase its operating efficiency and returns on total investment. Because earnings on borrowing are higher than the interest payable on debt, the company's total earnings will increase, ultimately boosting stockholders' profits.Leverage and Capital Costs
The debt to equity ratio plays a role in the working average cost of capital (WACC). The overall interest on debt represents the break-even point that must be obtained to profitability in a given venture. Thus, WACC is essentially the average interest an organization owes on the capital it has borrowed for leverage. Let's say equity represents 60% of borrowed capital, and debt is 40%. This results in a financial leverage calculation of 40/60, or 0.6667. The organization owes 10% on all equity and 5% on all debt. That means that the weighted average cost of capital is (.4)(5) + (.6)(10) - or 8%. For every $10,000 borrowed, this organization will owe $800 in interest. Profit must be higher than 8% on the project to offset the cost of interest and justify this leverage.Benefits of Financial Leverage
Leverage provides the following benefits for companies:- Leverage is an essential tool a company's management can use to make the best financing and investment decisions.
- It provides a variety of financing sources by which the firm can achieve its target earnings.
- Leverage is also an essential technique in investing as it helps companies set a threshold for the expansion of business operations. For example, it can be used to recommend restrictions on business expansion once the projected return on additional investment is lower than the cost of debt.