Granite (GVA) Secures $51.5M Construction Option in Alaska
Granite Construction Incorporated GVA has secured the Option X portion, which is earthwork and staging, of the Polychrome Area Improvements project by the Federal Highway Administration (FHWA) in Denali National Park, Alaska.
This construction award has a total value of $51.5 million and is scheduled to begin in July 2023.
The Option X portion of the project includes equipment mobilization, remote worker camp setup in existing National Parks Service material supply area and construction of contractor facilities and initial staging areas. The aforementioned work procedures will be undertaken along the environmentally sensitive Denali Park Road, initiating access to the site.
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Shares of GVA have gained 44.4% in the past year, compared with the Zacks Building Products - Heavy Construction industry’s 53% growth. Although the shares of the company have underperformed its industry, the consistent award wins will enable GVA to gain momentum in the upcoming period.
Polychrome Area Improvements Contract
On Feb 15, 2023, Granite was selected as the Construction Manager or General Contractor (CM/GC) by the FHWA for the Polychrome Area Improvements project. The preconstruction of this project was initiated in January 2023 and is now expected be complete by July 2026. This project win is a boost in GVA’s Mountain group pipeline under the Construction segment.
The entire project is divided into three main portions. Option W is for long-lead materials procurements made as the design progressed, Option X is for earthwork and staging, and Option Y is for bridge construction. Following the Option X portion win, the total value of awarded options stands at $67 million since its preconstruction. The total value of the entire project ranges within $100 million.
As a CM or GC, Granite will engage early in the design process for constructability input which will give the company more opportunity for innovation and efficiency compared to traditional delivery methods. The CM/GC project delivery method will promote collaboration and solicit value-adding feedback from the contractor.
Robust CAP Growth
The Construction segment and the performance of the Granite’s operating segments showcased strong market growth in first-quarter fiscal 2023, with Committed and Awarded Projects (CAP) reaching $5.1 billion. The upside was driven by the momentum in the most recent quarters, reflecting strategic expansion. Despite unfavorable weather conditions, the company's strategic approach of selective bidding resulted in increased margins and a higher number of projects won in the quarter.
Precisely, the Mountain Group reported CAP of $364 million in first-quarter fiscal 2023, up 34% from the previous quarter’s levels and a remarkable 40% increase since the first quarter of 2022. The Alaska region played a key role in this growth, with a notable increase of $215 million, which was primarily driven by the successful booking of two best-value projects during the quarter. This group was reported as the largest group by revenue in 2022.
Zacks Rank & Key Picks
Granite currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Construction sector are Eagle Materials Inc. EXP, Dycom Industries, Inc. DY and Martin Marietta Materials, Inc. MLM.
Eagle Materials currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
EXP delivered a trailing four-quarter earnings surprise of 6.5%, on average. Shares of the company have rallied 64.5% in the past year. The Zacks Consensus Estimate for EXP’s fiscal 2024 sales and earnings per share indicates growth of 2% and 8.3%, respectively, from the previous year’s reported levels.
Dycom currently sports a Zacks Rank of 1. DY delivered a trailing four-quarter earnings surprise of 153.7%, on average. Shares of the company have risen 17.6% in the past year.
The Zacks Consensus Estimate for DY’s fiscal 2024 sales and earnings per share indicates growth of 8.3% and 41%, respectively, from the previous year’s reported levels.
Martin Marietta currently carries a Zacks Rank #2 (Buy). MLM delivered a trailing four-quarter earnings surprise of 31%, on average. Shares of the company have gained 44.2% in the past year.
The Zacks Consensus Estimate for MLM’s 2023 sales and earnings per share indicates growth of 18.4% and 31.7%, respectively, from the previous year’s reported levels.
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