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1. Company Snapshot

1.a. Company Description

Knife River Corporation provides aggregates-based construction materials and contracting services in the United States.It operates through six segments: Pacific, Northwest, Mountain, North Central, South, and Energy Services.The company mines, processes, and sells construction aggregates, including crushed stone and sand, and gravel; and produces and sells asphalt and ready-mix concrete, as well as provides contracting services to support the aggregate-based product lines, including heavy-civil construction, asphalt and concrete paving, and site development and grading.


It serves federal, state, and municipal governments for various projects, such as highways, bridges, airports, schools, public buildings, and other public-infrastructure projects.The company was founded in 1917 and is based in Bismarck, North Dakota.

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1.b. Last Insights on KNF

The recent performance of Knife River Corporation was driven by a stronger-than-expected earnings report, which led to a stock price gap up. The company's revenue increased by 15% year-over-year, reaching $755.1 million in the fourth quarter, while net income rose by 9% to $3,146.0 million for the full year. Additionally, Knife River's earnings per share of $0.56 beat the Zacks Consensus Estimate of $0.41 per share. The company's solid financial performance was also reflected in its ability to attract institutional investors, with Clear Creek Financial Management LLC boosting its holdings in Knife River by 103.2% during the third quarter. Furthermore, Paradice Investment Management initiated a new position in Knife River, acquiring 312,743 shares worth $22.00 million at quarter-end.

1.c. Company Highlights

2. Knife River's Strong 2025 Results and Promising 2026 Outlook

Knife River Corporation reported robust financial performance for 2025, with adjusted EBITDA growing 7% to $497 million. The company's revenue and profitability were driven by its strategic initiatives, including investments in competitive edge programs and acquisitions. The company's EPS came in at $0.56, beating analyst estimates of $0.41. The strong financial performance was accompanied by a significant increase in backlog, which stood at $1 billion, a 38% increase from the previous year.

Publication Date: Feb -22

📋 Highlights
  • EBITDA Growth: Adjusted EBITDA increased 7% YoY to $497 million, with 2026 guidance of $520–$560 million.
  • Backlog Surge: Record backlog of $1.0 billion, up 38% YoY, driven by infrastructure funding and M&A.
  • Aggregates Expansion: Aggregates volumes rose 17% Q4 YoY, pricing increased 8%, and gross margins improved 200 bps.
  • 2026 Revenue Guidance: Consolidated revenue projected between $3.3–$3.5 billion, with 16% adjusted EBITDA margin midpoint.
  • Margin Improvements: Aggregates expected to drive 200 bps EBITDA margin improvement in 2026, aided by operational efficiency.

Segment Performance

The company's West segment reported record profitability, with aggregates volumes increasing by 17% and pricing rising by 8%. The ready mix segment also saw strong volume increases of 20% and gross margin expansion. The company's aggregates gross margins increased by 200 basis points, driven by ongoing pit crew improvements and recouping preproduction costs.

Guidance and Outlook

Knife River expects consolidated revenue to range between $3.3 billion and $3.5 billion in 2026, with adjusted EBITDA between $520 million and $560 million. The company anticipates mid-single digit growth in aggregates volumes and pricing, with continued margin expansion. The guidance implies a 9% growth rate on organic business, with the acquisition of Texcrete contributing to offsetting seasonal losses.

Valuation Metrics

Using the current stock price, the company's P/E Ratio stands at 32.75, EV/EBITDA at 12.86, and P/S Ratio at 1.63. These valuation metrics suggest that the market is pricing in a certain level of growth, which is consistent with the company's guidance. The company's Net Debt / EBITDA ratio is 2.32, below its target of 2.5 times, indicating a healthy balance sheet.

Growth Strategy

Knife River's growth strategy is focused on expanding its aggregates and ready mix businesses, with a strong pipeline of M&A opportunities. The company is also investing in its competitive edge initiatives, including pit crew improvements and commercial excellence programs. As Brian Gray noted, "We're very excited about our future," with a record backlog and good negotiations underway.

Conclusion on Financial Health

The company's financial health is robust, with a solid balance sheet and cash flows from operations expected to be strong. The company's net leverage position is 2.2 times, below its target of 2.5 times, and it has $75 million in cash on hand and $475 million available on its revolver.

3. NewsRoom

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Congress Asset Management Co. Cuts Stock Holdings in Knife River Corporation $KNF

Mar -24

Source: defenseworld.net

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Knife River Acquires Aggregates and Ready-Mix Business in Montana

Mar -23

Source: businesswire.com

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Knife River Corporation (NYSE:KNF) Receives $97.43 Consensus Target Price from Brokerages

Mar -21

Source: defenseworld.net

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Contrasting Knife River (NYSE:KNF) and James Hardie Industries (NYSE:JHX)

Mar -04

Source: defenseworld.net

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Knife River Expands into Utah with Acquisition of Morgan Asphalt in Salt Lake City

Feb -27

Source: businesswire.com

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Knife River Corporation $KNF Shares Purchased by Clear Creek Financial Management LLC

Feb -21

Source: defenseworld.net

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Knife River Corporation (NYSE:KNF) Receives Average Recommendation of “Moderate Buy” from Analysts

Feb -21

Source: defenseworld.net

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Here Are Wednesday’s Top Wall Street Analyst Research Calls: Cadence Design, Crox, Genuine Parts, Kratos Defense, Medtronic, Palantir, StubHub, Transocean, and More

Feb -18

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.89%)

6. Segments

Central

Expected Growth: 3.8%

Central segment of Knife River Corporation, with 3.8% growth, is driven by increasing demand for construction materials, strategic acquisitions, and expansion into new markets. Additionally, cost savings initiatives, operational efficiencies, and a strong backlog of projects contribute to the segment's growth.

Northwest

Expected Growth: 3.9%

Northwest segment's 3.9% growth is driven by increasing infrastructure spending, robust highway construction, and rising demand for construction materials. Additionally, Knife River Corporation's strategic acquisitions and operational efficiencies have contributed to the segment's growth.

Mountain

Expected Growth: 3.7%

Mountain segment of Knife River Corporation, with 3.7% growth, is driven by increasing demand for aggregates in infrastructure projects, expansion into new markets, and strategic acquisitions. Additionally, growing construction activities in the Western United States, where the company has a strong presence, contribute to the segment's growth.

Pacific

Expected Growth: 4.1%

Pacific segment of Knife River Corporation's 4.1% growth is driven by increasing demand for construction materials, strategic acquisitions, and expansion into new markets. Additionally, the company's focus on operational efficiency, cost savings, and investments in technology have contributed to its growth. Strong backlog and bidding activity also support future growth prospects.

Energy Services

Expected Growth: 4.3%

Knife River Corporation's Energy Services segment growth of 4.3% is driven by increasing demand for infrastructure development, expansion of renewable energy sources, and rising investments in oil and gas exploration. Additionally, the company's strategic acquisitions and focus on operational efficiency have contributed to its growth momentum.

Corporate Services

Expected Growth: 3.6%

Knife River Corporation's Corporate Services segment growth of 3.6% is driven by increasing demand for infrastructure development, strategic acquisitions, and expansion into new markets. Additionally, the company's focus on operational efficiency, cost savings, and investments in technology have contributed to the segment's growth.

7. Detailed Products

Aggregates

Knife River Corporation provides a wide range of aggregates including sand, gravel, and crushed stone for construction, landscaping, and other applications.

Asphalt

Knife River Corporation offers high-quality asphalt products for paving, patching, and repairing roads, highways, and parking lots.

Ready Mix Concrete

Knife River Corporation provides ready mix concrete for building foundations, walls, floors, and other structures.

Cement

Knife River Corporation offers high-quality cement products for construction, building, and infrastructure development.

Construction Services

Knife River Corporation provides construction services including excavation, grading, and paving for commercial and residential projects.

8. Knife River Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Knife River Corporation is moderate, as there are some alternative materials and products available in the market, but they are not highly attractive to customers.

Bargaining Power Of Customers

The bargaining power of customers for Knife River Corporation is low, as the company operates in a niche market with limited customer base, and customers have limited bargaining power.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Knife River Corporation is moderate, as the company relies on a few key suppliers for raw materials, but has some flexibility to switch suppliers if needed.

Threat Of New Entrants

The threat of new entrants for Knife River Corporation is low, as the company operates in a niche market with high barriers to entry, and new entrants would face significant challenges in competing with the company.

Intensity Of Rivalry

The intensity of rivalry for Knife River Corporation is high, as the company operates in a competitive market with several established players, and the company needs to continuously innovate and improve its products and services to stay competitive.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 35.43%
Debt Cost 10.36%
Equity Weight 64.57%
Equity Cost 10.36%
WACC 10.36%
Leverage 54.87%

11. Quality Control: Knife River Corporation passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Reliance Steel & Aluminum

A-Score: 5.3/10

Value: 4.7

Growth: 6.1

Quality: 5.6

Yield: 3.0

Momentum: 4.0

Volatility: 8.7

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Boise Cascade

A-Score: 5.1/10

Value: 6.9

Growth: 5.8

Quality: 5.4

Yield: 6.0

Momentum: 0.5

Volatility: 6.0

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Eagle Materials

A-Score: 4.5/10

Value: 3.5

Growth: 7.6

Quality: 6.3

Yield: 0.0

Momentum: 2.5

Volatility: 7.0

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Summit Materials

A-Score: 4.4/10

Value: 2.1

Growth: 5.4

Quality: 4.4

Yield: 1.0

Momentum: 7.0

Volatility: 6.3

1-Year Total Return ->

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CMC

A-Score: 4.2/10

Value: 3.6

Growth: 3.8

Quality: 4.5

Yield: 2.0

Momentum: 5.0

Volatility: 6.3

1-Year Total Return ->

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Knife River

A-Score: 3.3/10

Value: 5.7

Growth: 5.1

Quality: 4.2

Yield: 0.0

Momentum: 1.5

Volatility: 3.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

83.79$

Current Price

83.8$

Potential

-0.00%

Expected Cash-Flows