Is Construction Partners, Inc. overvalued or undervalued?

As of 31 January 2025, the valuation grade for Construction Partners, Inc. has moved from expensive to very expensive. The company is currently overvalued based on its high valuation ratios. The P/E ratio stands at 75, significantly higher than the industry average, while the EV to EBITDA ratio is 28.25, indicating a premium valuation compared to peers.
In comparison to its peers, Construction Partners, Inc. has a P/E ratio that exceeds Dycom Industries, Inc. at 28.83 and Sterling Infrastructure, Inc. at 23.94, both of which are considered expensive and fair, respectively. The PEG ratio of 3.07 further emphasizes the overvaluation, especially when compared to Primoris Services Corp. with a PEG of 0.47. Despite the company's strong stock performance, with a 1-year return of 90.13% compared to the S&P 500's 10.26%, the current valuation metrics suggest that the stock is not justified at its current price level.