Granite Construction Hits 52-Week High on Solid Backlog
Shares of Granite Construction Incorporated GVA scaled a new 52-week high of $42.20 on Dec 15, and eventually closed a notch lower at $41.98. The stock price appreciation came on the back of benefits from sound backlog and award wins. The company has delivered a one-year return of about 9.28%.
The Watsonville, CA-based infrastructure contractor and construction materials producing company has a market cap of $1.65 billion. Average volume of shares traded over the last three months was approximately 244K.
Strengths of Granite Construction
The share price of Granite Construction has been on the rise since the company posted remarkable third-quarter 2015 results on Nov 2. Earnings per share of 77 cents marked a whopping 103% improvement year over year. Sales also jumped 4.4% year over year in the quarter, reflecting solid execution and modest economic growth.
Moreover, the company’s total contract backlog increased 4% year over year to $3 billion in the reported quarter. Granite Construction will remain focused on executing large project backlog along with bidding for and winning new works.
Additionally, Granite Construction has partnerships in place and expects to bid on more than $16 billion large projects between now and the end of 2016. Also, over the same period, the company expects to bid on projects worth $5 billion.
Subsequent to the third-quarter results, Granite Construction announced that Paso del Norte Trackworks, a joint venture of Granite Construction and RailWorks Track Systems Inc., has been awarded a $61 million transit contract by the Camino Real Regional Mobility Authority. Construction work will begin in Dec 2015, and will take approximately two years to finish.
Further, plant efficiency remains the main focus of Granite Construction’s business. This is because operational success and continuous improvement in materials facilities have been aiding cost-management.
For 2015, Granite Construction expects consolidated revenue growth in the mid-single digits and consolidated EBITDA margin of 6% to 8%. The company will also benefit from economic improvement and increased demand. Notably, Granite Construction’s sound backlog and several additional awards bode well for its future performance.
Granite Construction currently has a Zacks Rank #4 (Sell).
Stocks to Consider
Some better-ranked stocks from the same sector are Dycom Industries Inc. DY, Jiangsu Expressway Co. Ltd. JEXYY and Zhejiang Expressway Co. Ltd. ZHEXY. While Dycom Industries sports a Zacks Rank #1 (Strong Buy), Jiangsu Expressway and Zhejiang Expressway hold a Zacks Rank #2 (Buy).
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