Granite (GVA) Wins the Time and Materials Contract by Caltrans
Granite Construction Incorporated GVA has been selected by the California Department of Transportation (Caltrans) for restoring local and visitor traffic access through the State Route 180 (SR 180) to the Sequoia National Forest near Kings Canyon National Park.
Granite is optimistic about its selection for the project as this highlights its long-standing partnership with Caltrans District 6. It believes that its perspective of coming through with innovative solutions to urgent and complex transportation system needs is aiding this collaboration, thus fueling its growth momentum.
Shares of GVA gained 1.2% on Sep 14, in the after-hour trading session. Furthermore, the stock gained 41.6% in the past year, compared with the Zacks Building Products - Heavy Construction industry’s 34.7% growth.
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Focus on the Storm Damage Repair Project
Per the time and materials contract, the route access restoration process includes clearance of various rocks and mudslides on several remote sections of the SR 180 route, construction of retaining walls to enhance the roadway's stability and minimize its future chances of risk, installation of effective drainage system and reconstruction of damaged sections of SR 180, thus enabling safe transit along the route.
The storm damage repair project is funded by Caltrans and is expected to have a total value of $12.5 million. The project is in motion since August 2023 and is anticipated to be complete by June 2024. Granite intents on including the project value in its third-quarter 2023 Committed and Awarded Projects (CAP).
CAP Solidifying Granite’s Growth Prospects
Granite is focusing on growing a high-quality CAP portfolio on the back of a positive public funding environment and resilient private market. During second-quarter 2023, total CAP reached a record balance of $5.44 billion, up 6.5% sequentially and 29% year over year. The uptrend was driven by solid public and private work environment across all its geographies. Also, the range of opportunities came through with the Federal Infrastructure Bill being added to the growth momentum.
Under the Construction segment, CAP in California group came in at $2.35 billion, up 23% sequentially and 44% year over year. The results are backed by solid Caltrans’ contract budget (up 5% year over year) despite state budget deficit. Furthermore, Mountain group’s CAP grew 4% sequentially and 40% year over year to $1.49 billion.
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. The revenues were driven by higher levels of CAP, especially in the California and Mountain groups. Granite expects that the current CAP level will continue to support the segment’s groups for the remaining part of 2023.
Zacks Rank
Granite currently carries a Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks from the Construction sector are EMCOR Group, Inc. EME, TopBuild Corp. BLD and Fluor Corporation FLR.
EMCOR currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
EME delivered a trailing four-quarter earnings surprise of 17.2%, on average. Shares of the company have risen 84.8% in the past year. The Zacks Consensus Estimate for EME’s 2023 sales and earnings per share (EPS) indicates growth of 11.7% and 36.2%, respectively, from the previous year’s reported levels.
TopBuild currently sports a Zacks Rank of 1. BLD delivered a trailing four-quarter earnings surprise of 14.1%, on average. Shares of the company have risen 62.4% in the past year.
The Zacks Consensus Estimate for BLD’s 2023 sales and EPS indicates growth of 3.3% and 6.1%, respectively, from the previous year’s reported levels.
Fluor currently sports a Zacks Rank of 1. FLR delivered a trailing four-quarter negative earnings surprise of 5.3%, on average. Shares of the company have gained 35.1% in the past year.
The Zacks Consensus Estimate for FLR’s 2023 sales and EPS indicates growth of 11.3% and 141.5%, respectively, from the previous year’s reported levels.
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