Critical Analysis: Obayashi (OTCMKTS:OBYCF) and Construction Partners (NASDAQ:ROAD)

Construction Partners (NASDAQ:ROAD) and Obayashi (OTCMKTS:OBYCF) are both construction companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, risk, earnings, analyst recommendations, valuation, institutional ownership and profitability.

Volatility & Risk

Construction Partners has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500. Comparatively, Obayashi has a beta of 0.28, indicating that its stock price is 72% less volatile than the S&P 500.

Earnings & Valuation

This table compares Construction Partners and Obayashi”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Construction Partners	$2.81 billion	2.69	$101.78 million	$2.20	60.88
Obayashi	$17.21 billion	1.14	$976.81 million	$1.72	16.13

Obayashi has higher revenue and earnings than Construction Partners. Obayashi 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 recommendations and price targets for Construction Partners and Obayashi, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Construction Partners	0	3	2	2	2.86
Obayashi	0	0	0	0	0.00

Construction Partners presently has a consensus target price of $127.80, indicating a potential downside of 4.58%. Given Construction Partners’ stronger consensus rating and higher probable upside, equities analysts plainly believe Construction Partners is more favorable than Obayashi.

Institutional and Insider Ownership

94.8% of Construction Partners shares are held by institutional investors. 15.7% of Construction Partners shares are held by 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Construction Partners	3.99%	15.26%	4.40%
Obayashi	7.06%	9.60%	3.90%

Summary

Construction Partners beats Obayashi on 12 of the 15 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 Obayashi

Obayashi Corporation engages in the construction business in Japan, North America, Asia, the Middle East, Europe, and Oceania. The company constructs buildings, including offices, condominiums, commercial facilities, factories, hospitals, and schools; and civil engineering projects, such as tunnels, bridges, dams, river works, urban civil engineering structures, railroads, and expressways. It is also involved in the development and leasing of real estate properties in various locations, primarily in urban areas, as well as property management activities; solar, biomass, geothermal, and wind power generation business; and PPP and agriculture business. In addition, the company provides non-life insurance agency business. Further, it engages in the provision of urban redevelopment, contracted operations, and facility management services, as well as M&E design and construction activities. The company was founded in 1892 and is headquartered in Tokyo, Japan.