Granite Construction Hits 52-Week High - Analyst Blog

Shares of Granite Construction Incorporated GVA reached a new 52-week high of $39.64 on March 19, up from its previous high of $39.49 on March 18.

The stock closed at $39.26 at the end of trading yesterday, with a solid one-year return of about 29.7% and year-to-date return of about 12%, outperforming the S&P 500. The average volume of shares traded over the last three months was roughly 260K.

Based in Watsonville, CA, the infrastructure contractor and construction material producer has a market cap of $1.53 billion and long-term expected earnings growth of 7%.

Growth Drivers

On Jan 29, Granite Construction reported fourth-quarter 2013 earnings per share of 2 cents, which outperformed the Zacks Consensus Estimate of a loss of 3 cents per share.

The company's total contract backlog increased to $2.5 billion as of Dec 31, 2013 from $1.7 billion as of Dec 31, 2012. The rise was due to addition of the Tappan Zee Bridge project in New York, the IH-35E highway reconstruction project in Texas, I-40/440 project in North Carolina as well as an overall increase in the Construction segment backlog.

Granite Construction's backlog at 2013-end reflected a diverse, healthy portfolio of projects, which bodes well for the future. In 2014, the company expects to bid on more than $13 billion of large projects. The company foresees an additional $20 billion in large projects beyond 2014.

On March 6, Granite Construction won a $36 million road and bridge project from the Alaska Department of Transportation. Construction work is scheduled to begin in April 2014 and the project will likely be complete in late 2015. The company expects to book the project into backlog during the first quarter of 2014.

Furthermore, diversification opportunities underground, both in power and tunnel, brightens the company's prospects.  

Granite Construction currently carries a short-term Zacks Rank #5 (Strong Sell).

Other Stocks to Consider

Some better-ranked stocks in the same industry include Wolseley plc (WOSYY), MasTec, Inc. MTZ and USG Corporation USG. All of these have a Zacks Rank #2 (Buy).