North American Construction (NOA) Wins Regional Services Deal
North American Construction Group Ltd. NOA or NACG’s Mikisew North American Limited Partnership (“MNALP”), has received a three-year regional services contract from a major producer in the Canada oil sand region. The contract includes the provision of services across various mine sites operated by the producer.
The first year of the agreed earthworks volumes will provide NACG with $225 million in contractual backlog. Management expects further commitments, the backlog of which ranges between $25 million and $50 million, to be achieved prior to the end of February 2024.
On a proforma basis, NOA’s combined backlog was $2.8 billion as of Sep 30, 2023. Including the above-mentioned expected benefits, its combined backlog is now projected to be more than $3 billion.
MNALP is a limited partnership between NACG and the Mikisew Group of Companies. Meanwhile, the contract is effective immediately, with an expiration date of Jan 30, 2027.
Share Price Performance
Shares of this heavy equipment and mining contractor have gained 50.4% in the past year, outperforming the Zacks Building Products - Heavy Construction industry’s 12.2% growth.
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NACG provides equipment maintenance and mining and heavy construction services to the resource development and industrial construction markets in Canada, the U.S. and Australia. Its range of services includes constructability reviews, budgetary cost estimates, design-build construction, project management, contract mining and equipment maintenance.
NOA’s 2024 earnings estimate moved up to $3.22 per share from $3.19 in the past 60 days, indicating 51.7% year over year growth. It has a VGM Score of B.
In October 2023, NACG acquired MacKellar Group for a total expected consideration of $395 million. These strategic moves are likely to benefit the company in the future as well.
Zacks Rank & Recent Construction Releases
NACG currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PulteGroup Inc. PHM reported mixed results in fourth-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimates, but revenues missed the same. Both metrics decreased year over year.
Nonetheless, during the latter part of the fourth quarter, PulteGroup observed a notable surge in buyer activity, mainly attributed to declining interest rates. December emerged as the quarter's peak sales month. With the anticipation of sustained lower interest rates in 2024, the company remains optimistic that the enhanced affordability landscape will continue to attract prospective buyers.
NVR, Inc. NVR reported mixed fourth-quarter 2023 results, with earnings surpassing the Zacks Consensus Estimate and Homebuilding revenues missing the same. Both the top and bottom lines decreased on a year-over-year basis due to softened housing demand, given higher mortgage rates during the period.
The company reported earnings of $121.56 per share, which topped the consensus mark of $118.63 by 2.9%. The reported figure decreased 9% from the prior-year quarter’s figure of $133.44 per share. Total revenues (Homebuilding & Mortgage Banking fees combined) amounted to $2.43 billion for the reported quarter, indicating a decline of 10% on a year-over-year basis.
M.D.C. Holdings, Inc. MDC reported better-than-expected results for fourth-quarter 2023. Its earnings topped the Zacks Consensus Estimate and increased year over year. Revenues surpassed the consensus estimate but declined year over year.
MDC’s uptrend can be attributed to the current new home market, which continues to benefit from the lack of existing home supply. The company witnessed notable improvements in its net new orders. This was driven by a significant decline in cancellations and its use of financing incentives aimed at reducing the negative impact of higher mortgage rates for its buyers.
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