| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 68.39 | 2 |
| Intrinsic value (DCF) | 35.33 | -47 |
| Graham-Dodd Method | 38.64 | -42 |
| Graham Formula | 37.15 | -45 |
Knife River Corporation (NYSE: KNF) is a leading provider of aggregates-based construction materials and contracting services in the U.S., serving federal, state, and municipal infrastructure projects. Founded in 1917 and headquartered in Bismarck, North Dakota, the company operates across six segments: Pacific, Northwest, Mountain, North Central, South, and Energy Services. Knife River mines, processes, and sells construction aggregates such as crushed stone, sand, and gravel, while also producing asphalt and ready-mix concrete. Its contracting services include heavy-civil construction, paving, and site development, supporting critical infrastructure like highways, bridges, and airports. With a market cap of $5.44B and revenue of $2.9B (latest fiscal year), Knife River is a key player in the Construction Materials sector, benefiting from government infrastructure spending and regional market demand. The company’s vertically integrated model enhances efficiency, while its diversified geographic footprint mitigates regional economic risks.
Knife River presents a compelling investment case due to its strong position in the U.S. construction materials market, supported by steady infrastructure demand and government funding (e.g., the Infrastructure Investment and Jobs Act). The company’s diversified operations across six segments and regions reduce exposure to localized downturns. However, risks include cyclicality in construction spending, volatile input costs (e.g., fuel, labor), and high capital intensity. With a beta of 1.11, KNF exhibits moderate market sensitivity. While the company is profitable (net income of $201.7M, diluted EPS of $3.55), its lack of dividends may deter income-focused investors. Operating cash flow ($322.3M) and manageable debt ($726.8M) suggest financial stability, but investors should monitor capex requirements ($172.4M) and aggregate pricing trends.
Knife River’s competitive advantage lies in its vertically integrated model, combining aggregates production with downstream contracting services, which ensures supply chain control and margin stability. Its regional diversification across the U.S. provides resilience against localized demand fluctuations. The company’s long-standing government contracts and reputation for reliability in public infrastructure projects further solidify its moat. However, competition is intense, with larger players like Vulcan Materials and Martin Marietta leveraging greater scale and nationwide footprints. Knife River’s smaller size limits its ability to compete on pricing in some markets, though its focus on regional expertise and customer relationships offsets this. The Energy Services segment adds diversification but exposes the company to oil and gas market volatility. While Knife River’s balance sheet is healthy, its capital-intensive operations require sustained investment, posing a hurdle compared to leaner competitors. Strategic acquisitions could enhance growth, but integration risks remain.