Granite (GVA) Wins $45M UDOT Contract, Fortifies Q3 CAP
Granite Construction Incorporated GVA has secured a $45 million contract from the Utah Department of Transportation ("UDOT"). The project involves widening and enhancing State Route 108 (SR-108) in Davis County, Utah.
Per the contract, GVA is tasked with extending SR-108 from 300 N to 1800 N. The project involves the transformation of the existing three-lane asphalt road to a five-lane Portland Cement Concrete Pavement ("PCCP") highway. This effort includes a comprehensive reconstruction and expansion initiative, focusing on replacing and enhancing all utilities and infrastructure elements. These improvements will collectively enhance the safety, efficiency and connectivity of the transportation corridor.
GVA will utilize 48,000 tons of untreated base course, 21,000 tons of concrete sand and 16,000 tons of concrete aggregates from its nearby South Wells Facility. Moreover, 2,000 tons of hot mix asphalt will be procured from the nearby West Haven Facility. This method simplifies the acquisition of necessary materials from the company's neighboring facilities.
The UDOT contract will be funded through State and Federal sources and will be included in Granite's third-quarter Committed and Awarded Projects ("CAP"). The work will begin in October 2023 and is expected to be completed in November 2025.
Solid CAP Synergies
Shares of GVA rose 39.9% in the past year compared with the Zacks Building Products - Heavy Construction industry’s 32.6% growth. The performance of Granite’s operating segments showcased strong market growth in second-quarter 2023, benefiting from a strong public funding environment, with California and Mountain Groups leading the way. In the second quarter of 2023, the Construction segment of the company reported revenues of $749.4 million, up 5.1% from the prior year’s levels.
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Total CAP reached $5.4 billion in the reported quarter, up by $334 million sequentially and $1.2 billion year over year. 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.
At the end of second-quarter 2023, GVA's CAP in the Mountain Group reached $1.5 billion, up 4% sequentially and 40% from the prior-year quarter’s levels. The upside in CAP is primarily attributed to the Alaska, Nevada and Utah regions. Granite expects that the current CAP level will continue to support the segment’s groups for the remaining part of 2023.
Zacks Rank & Key Picks
Granite currently sports a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Zacks Construction sector are:
Construction Partners, Inc. ROAD sports a Zacks Rank #1 (Strong Buy). ROAD has a trailing four-quarter earnings surprise of 10.6% on average. Shares of ROAD have gained 42.9% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ROAD’s 2023 sales and earnings per share (EPS) indicates gain of 19.4% and 112.2%, respectively, from the year-ago period’s levels.
TopBuild Corp. BLD flaunts a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 14.1% on average. Shares of BLD have surged 37.7% in the past year.
The Zacks Consensus Estimate for BLD’s 2023 sales and EPS indicates gain of 3.3% and 8.4%, respectively, from the year-ago period’s levels.
EMCOR Group, Inc. EME flaunts a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 17.2%, on average. Shares of EME have risen 69.9% in the past year.
The Zacks Consensus Estimate for EME’s 2023 sales and EPS suggests growth of 11.3% and 35.4%, respectively, from the year-ago period’s levels.
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