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Will Stable Demand Aid Tutor Perini's (TPC) Q2 Earnings?

Zacks Equity Research

Tutor Perini Corporation TPC is scheduled to report second-quarter 2020 results on Jul 29, after market closes.

In the last reported quarter, the company’s top and bottom lines handily beat the Zacks Consensus Estimate by 18.4% and 1033.3%, respectively. The bottom line, which improved significantly from the year-ago loss of 1 cent per share, marked the highest first-quarter earnings in the past 10 years. The upside was backed by strong revenue growth across the segments and improved performance on various projects in New York in the Specialty Contractors segment.

Second-Quarter Expectations

The Zacks Consensus Estimate for Tutor Perini’s second-quarter earnings is pegged at 41 cents per share, implying an improvement of 127.8% on a year-over-year basis. The consensus estimate for revenues is $1.2 billion, indicating 6.9% year-over-year growth.

Tutor Perini Corporation Price and EPS Surprise

Tutor Perini Corporation Price and EPS Surprise
Tutor Perini Corporation Price and EPS Surprise

Tutor Perini Corporation price-eps-surprise | Tutor Perini Corporation Quote

Factors to Note

The overall U.S. construction market rebound to pre-coronavirus levels is likely to reflect on Tutor Perini’s second-quarter results. Notably, the company has been benefiting from significant amount of project awards across multiple segments and solid construction spending.

Although Tutor Perini did not foresee any adverse impact from the pandemic on businesses, it might have experienced project delays and timing issues in the second quarter. Nonetheless, the company has been pursuing various new high-margin project opportunities in recent times.

Segment-Wise Discussion

The Civil segment (contributing more than 42% to revenues) has been witnessing increased activities in various large projects. These large infrastructure projects include Newark Airport Terminal One, the Purple Line Extension projects in Los Angeles, California High-Speed Rail and Minneapolis Southwest Light Rail. However, the segment has been experiencing significant competition in various large civil projects.

The Zacks Consensus Estimate for Civil segment’s revenues is $497 million, indicating a decline of more than 8% year over year. The same for operation income is currently pegged at $52 million. A loss of $164.5 million was recorded in the year-ago period.

As the construction market strengthened post the easing of COVID-19-imposed restrictions, the Building segment might have witnessed improved revenues. However, the segment has been experiencing low fees associated with CM work in a building industry. Nonetheless, rebounding housing market might have provided some support. The consensus mark for the segment’s revenues is currently pegged at $454 million, indicating 4.6% year-over-year growth. The same for operation income is $11.4 million. The prior-year loss was $3.8 million.

The Specialty Contractors unit has been experiencing strong demand, driven by large civil work and building project opportunities. The segment has been benefiting from new higher-margin projects, given improved performance by two New York subsidiaries - Five Star Electric and WDF Mechanical. The consensus mark for the segment’s revenues is currently pegged at $251 million, implying a 12.4% year-over-year improvement. The same for operation income is pegged at $10.3 million. The prior-year loss was recorded at $159.8 million.

Quantitative Model Prediction

Our proven model does not conclusively predict an earnings beat for Tutor Perini this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here.

Earnings ESP: Tutor Perini has an earnings ESP is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: It currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Worth a Look

Here are some stocks in the Zacks Construction sector that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming releases.

Armstrong World Industries, Inc. AWI has an Earnings ESP of +13.97% and a Zacks Rank #2.

TopBuild Corp. BLD has an Earnings ESP of +29.11% and a Zacks Rank #1.

Owens Corning OC has an Earnings ESP of +47.78% and a Zacks Rank #3.

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Owens Corning Inc (OC) : Free Stock Analysis Report
 
Armstrong World Industries, Inc. (AWI) : Free Stock Analysis Report
 
Tutor Perini Corporation (TPC) : Free Stock Analysis Report
 
TopBuild Corp. (BLD) : Free Stock Analysis Report
 
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