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Granite Wins $45M Contract From Caltrans, GVA Stock Jumps
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Banking on its contract-winning spree, Granite Construction Incorporated’s (GVA - Free Report) stock witnessed a jump of 1.5% in the after-hour trading session on Tuesday. Investors might have sensed a strong prospect for the company’s top line in the future as it unveiled a $45 million deal from the California Department of Transportation (Caltrans).
GVA’s experts will reconstruct and modernize the John Wilkie Safety Roadside Rest Area along the Interstate 40 (I-40) corridor to improve safety and infrastructure. A modern rest area for motorists along I-40 will provide a safe place for travelers to rest and recover, given the significant distance from the nearest town.
Granite will provide materials from its Desert Cities Asphalt, including 12,200 tons of asphalt for parking lots and ramps to ensure superior quality and durability of the buildup. The project is expected to begin in September, with nearing completion in January 2026. The value of this contract was included in Granite’s second-quarter Committed and Awarded Projects (CAP).
Granite Boosts Top Line on Solid CAP
GVA is focused on growing a high-quality CAP portfolio within the Construction segment on the back of a positive public funding environment and resilient private market.
Granite’s CAP consists of two components, namely unearned revenue and other awards. Unearned revenue includes revenues GVA expects to record in the future on executed contracts. Other awards include the general construction portion of construction management/general contractor contracts, as well as deals with unexercised contract options or unissued task orders.
On Aug. 22, the company announced that it secured a $38-million contract from Caltrans for the Highway 101 mainline segment, which was included in GVA’s second-quarter CAP.
A Glimpse of the Stock's Q2 Performance & Outlook
During second-quarter 2024, Granite reported revenue growth of 20%, backed by strong performances from both construction and materials segments. Adjusted earnings per share (EPS) also moved up to $1.73 from $1.06 reported in second-quarter 2023. Adjusted EBITDA margin stood at 12%, up 290 basis points year over year.
Total CAP was $5.58 billion in the second quarter of 2024, up 2.5% year over year and 1.4% sequentially. The uptrend was driven by solid public and private work environments across its geographies. Specifically, CAP in California was $2.3 billion, up $2 million year over year.
Significant contributions to CAP during the second quarter of 2024 were $183 million for four highway projects in California, $114 million for a bridge project in Michigan, an $89 million airport project in Texas, a $65 million highway project in Utah and a $48 million fish passage project in Washington.
Given various market opportunities and healthy state funding levels, GVA is seeking significant bid opportunities to boost its CAP value in the rest of 2024.
For 2024, GVA expects revenues within $3.9-$4 billion, SG&A, as a percentage of revenues, in the 7.5-8% range and adjusted EBITDA margin of 9.5-11.5%. In 2023, Granite reported revenues of $3.5 billion, SG&A of 8.4% and adjusted EBITDA margin of 8%.
GVA has been consistently receiving contracts on the back of its solid execution efforts. Also, it has been diversifying and expanding its business through acquisitions and investments. Recently, it announced the acquisition of Dickerson & Bowen, Inc. (D&B), a leading regional aggregates, asphalt, and highway construction company serving Central and Southern Mississippi. This bolt-on buyout is highly complementary to GVA’s prior acquisition of Lehman-Roberts Company and Memphis Stone & Gravel (LRC and MSG). (Read more: Granite Acquires D&B, Expands Footprint in Southeast.)
As the construction industry continues to evolve, Granite's strategic expansion positions it as a formidable player in the market. GVA has been bolstering its materials business through both greenfield and bolt-on investments, and improved segment margins.
EPS estimates for 2024 have moved up to $5.24 from $4.76 in the past 30 days, indicating 66.9% year-over-year growth. The company’s EPS topped analysts’ expectations in three of the past four quarters, with an average of 26.4%.
Some other top-ranked stocks in the same space are EMCOR Group Inc. (EME - Free Report) , MasTec, Inc. (MTZ - Free Report) and Great Lakes Dredge & Dock Corporation (GLDD - Free Report) .
EMCOR, which currently sports a Zacks Rank of 1, has surged 69.7% over the past year. Also, 2024 EPS estimates have increased to $18.00 from $16.30 over the past 60 days. EPS for 2024 is expected to grow 34.9%. EME's earnings surpassed estimates in each of the trailing four quarters, the average surprise being 36.5%. It carries an impressive VGM Score of B. VGM Score helps to identify stocks with the most attractive value, growth and momentum.
MasTec, currently carrying a Zacks Rank of 2, has gained 12.3% over the past year. EPS estimates for 2024 have increased to $3.02 from $2.95 over the past 30 days. EPS for 2024 is expected to grow 53.3%. MTZ beat on earnings in three of the trailing four quarters but missed on one occasion, the average surprise being 19.4%. It carries an impressive VGM Score of A.
Great Lakes, currently carrying a Zacks Rank of 2, has gained 15.9% over the past year. EPS estimates for 2024 have increased to 80 cents from 72 cents over the past 30 days. EPS for 2024 is expected to grow 471.4%. GLDD surpassed earnings estimates in three of the trailing four quarters and met on one occasion, with the average surprise being 215.3%. It carries an impressive VGM Score of A.
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Granite Wins $45M Contract From Caltrans, GVA Stock Jumps
Banking on its contract-winning spree, Granite Construction Incorporated’s (GVA - Free Report) stock witnessed a jump of 1.5% in the after-hour trading session on Tuesday. Investors might have sensed a strong prospect for the company’s top line in the future as it unveiled a $45 million deal from the California Department of Transportation (Caltrans).
GVA’s experts will reconstruct and modernize the John Wilkie Safety Roadside Rest Area along the Interstate 40 (I-40) corridor to improve safety and infrastructure. A modern rest area for motorists along I-40 will provide a safe place for travelers to rest and recover, given the significant distance from the nearest town.
Granite will provide materials from its Desert Cities Asphalt, including 12,200 tons of asphalt for parking lots and ramps to ensure superior quality and durability of the buildup. The project is expected to begin in September, with nearing completion in January 2026. The value of this contract was included in Granite’s second-quarter Committed and Awarded Projects (CAP).
Granite Boosts Top Line on Solid CAP
GVA is focused on growing a high-quality CAP portfolio within the Construction segment on the back of a positive public funding environment and resilient private market.
Granite’s CAP consists of two components, namely unearned revenue and other awards. Unearned revenue includes revenues GVA expects to record in the future on executed contracts. Other awards include the general construction portion of construction management/general contractor contracts, as well as deals with unexercised contract options or unissued task orders.
On Aug. 22, the company announced that it secured a $38-million contract from Caltrans for the Highway 101 mainline segment, which was included in GVA’s second-quarter CAP.
A Glimpse of the Stock's Q2 Performance & Outlook
During second-quarter 2024, Granite reported revenue growth of 20%, backed by strong performances from both construction and materials segments. Adjusted earnings per share (EPS) also moved up to $1.73 from $1.06 reported in second-quarter 2023. Adjusted EBITDA margin stood at 12%, up 290 basis points year over year.
Total CAP was $5.58 billion in the second quarter of 2024, up 2.5% year over year and 1.4% sequentially. The uptrend was driven by solid public and private work environments across its geographies. Specifically, CAP in California was $2.3 billion, up $2 million year over year.
Significant contributions to CAP during the second quarter of 2024 were $183 million for four highway projects in California, $114 million for a bridge project in Michigan, an $89 million airport project in Texas, a $65 million highway project in Utah and a $48 million fish passage project in Washington.
Given various market opportunities and healthy state funding levels, GVA is seeking significant bid opportunities to boost its CAP value in the rest of 2024.
For 2024, GVA expects revenues within $3.9-$4 billion, SG&A, as a percentage of revenues, in the 7.5-8% range and adjusted EBITDA margin of 9.5-11.5%. In 2023, Granite reported revenues of $3.5 billion, SG&A of 8.4% and adjusted EBITDA margin of 8%.
What's Boosting GVA's Shares?
Shares of GVA soared 22.1% in the past three months against the Zacks Building Products - Heavy Construction industry’s 1% decline.
Image Source: Zacks Investment Research
GVA has been consistently receiving contracts on the back of its solid execution efforts. Also, it has been diversifying and expanding its business through acquisitions and investments. Recently, it announced the acquisition of Dickerson & Bowen, Inc. (D&B), a leading regional aggregates, asphalt, and highway construction company serving Central and Southern Mississippi. This bolt-on buyout is highly complementary to GVA’s prior acquisition of Lehman-Roberts Company and Memphis Stone & Gravel (LRC and MSG). (Read more: Granite Acquires D&B, Expands Footprint in Southeast.)
As the construction industry continues to evolve, Granite's strategic expansion positions it as a formidable player in the market. GVA has been bolstering its materials business through both greenfield and bolt-on investments, and improved segment margins.
EPS estimates for 2024 have moved up to $5.24 from $4.76 in the past 30 days, indicating 66.9% year-over-year growth. The company’s EPS topped analysts’ expectations in three of the past four quarters, with an average of 26.4%.
Zacks Rank & Other Key Picks
Granite currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Some other top-ranked stocks in the same space are EMCOR Group Inc. (EME - Free Report) , MasTec, Inc. (MTZ - Free Report) and Great Lakes Dredge & Dock Corporation (GLDD - Free Report) .
EMCOR, which currently sports a Zacks Rank of 1, has surged 69.7% over the past year. Also, 2024 EPS estimates have increased to $18.00 from $16.30 over the past 60 days. EPS for 2024 is expected to grow 34.9%. EME's earnings surpassed estimates in each of the trailing four quarters, the average surprise being 36.5%. It carries an impressive VGM Score of B. VGM Score helps to identify stocks with the most attractive value, growth and momentum.
MasTec, currently carrying a Zacks Rank of 2, has gained 12.3% over the past year. EPS estimates for 2024 have increased to $3.02 from $2.95 over the past 30 days. EPS for 2024 is expected to grow 53.3%. MTZ beat on earnings in three of the trailing four quarters but missed on one occasion, the average surprise being 19.4%. It carries an impressive VGM Score of A.
Great Lakes, currently carrying a Zacks Rank of 2, has gained 15.9% over the past year. EPS estimates for 2024 have increased to 80 cents from 72 cents over the past 30 days. EPS for 2024 is expected to grow 471.4%. GLDD surpassed earnings estimates in three of the trailing four quarters and met on one occasion, with the average surprise being 215.3%. It carries an impressive VGM Score of A.