Critical Review: Armstrong World Industries (NYSE:AWI) vs. Construction Partners (NASDAQ:ROAD)

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

Analyst Ratings

This is a summary of current ratings and price targets for Armstrong World Industries and Construction Partners, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Armstrong World Industries	0	4	5	1	2.70
Construction Partners	0	4	3	1	2.63

Armstrong World Industries currently has a consensus target price of $211.86, suggesting a potential upside of 36.99%. Construction Partners has a consensus target price of $136.50, suggesting a potential upside of 19.87%. Given Armstrong World Industries’ stronger consensus rating and higher possible upside, research analysts clearly believe Armstrong World Industries is more favorable than Construction Partners.

Insider & Institutional Ownership

98.9% of Armstrong World Industries shares are held by institutional investors. Comparatively, 94.8% of Construction Partners shares are held by institutional investors. 1.0% of Armstrong World Industries shares are held by insiders. Comparatively, 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 Armstrong World Industries and Construction Partners’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Armstrong World Industries	18.59%	36.71%	16.86%
Construction Partners	3.90%	15.22%	4.36%

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Armstrong World Industries	$1.62 billion	4.07	$308.70 million	$7.05	21.94
Construction Partners	$2.81 billion	2.29	$101.78 million	$2.28	49.94

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

Volatility and Risk

Armstrong World Industries has a beta of 1.17, indicating that its share price is 17% more volatile than the S&P 500. Comparatively, Construction Partners has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500.

Summary

Armstrong World Industries beats Construction Partners on 11 of the 14 factors compared between the two stocks.

About Armstrong World Industries

Armstrong World Industries, Inc., together with its subsidiaries, engages in the design, manufacture, and sale of ceiling and wall solutions in the Americas. It operates through Mineral Fiber and Architectural Specialties segments. The company offers mineral fiber, fiberglass wool, metal, wood, felt, wood fiber, and glass-reinforced-gypsum; ceiling component products, such as ceiling perimeters and trims, as well as grid products that support drywall ceiling systems; ceilings, walls, and facades for use in commercial settings; and manufactures ceiling suspension system (grid) products. It serves commercial and residential construction markets, as well as renovation of existing buildings sectors. The company sells its products to resale distributors, ceiling system contractors, wholesalers, and retailers comprising large home centers. Armstrong World Industries, Inc. was founded in 1860 and is headquartered in Lancaster, Pennsylvania.

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.