Granite Construction Incorporated
) reported a first quarter loss of 53 cents per share, missing the
Zacks Consensus Estimate by a wide margin. This prompted analysts
to revise their earnings estimates significantly lower for both
2013 and 2014.
This sent the stock to a Zacks Rank #5 (Strong Sell).
Granite Construction is an infrastructure contractor and
construction materials producer. It serves public- and
private-sector clients in the transportation, power, federal,
tunneling, underground, and industrial/mining and water resources
First Quarter Miss
Granite Construction reported its first quarter results on May 9.
Excluding an acquisition, revenues rose 1.5% while the gross profit
margin declined 10 basis points to 7.9%. Meanwhile, selling,
general and administrative expenses increased 69 basis points to
15.2% of total revenue.
These factors led to a loss of 53 cents per share, well below the
Zacks Consensus Estimate of -26 cents. It was the company's second
straight earnings miss.
Although the backlog for Granite increased from $1.7 billion at
year-end to $2.4 billion at the end of Q1, estimates still fell
significantly for both 2013 and 2014. This has sent the stock to a
Zacks Rank #5 (Strong Sell).
The Zacks Consensus Estimate for 2013 is now $1.12, down from $1.70
just 30 days ago. The 2014 consensus has fallen from $2.82 to $2.39
over the same period.
You can see this negative earnings momentum in the company's 'Price
& Consensus' chart:
Granite Construction also carries a long-term "Underperform" Zacks
Shares of GVA currently trade around 15x 12-month forward earnings,
which is basically in-line with the industry median. But investors
may want to consider some other stocks with better earnings
momentum within the 'Building-Heavy Construction' industry. For
) is a Zacks Rank #1 (Strong Buy) stock, and
Chicago Bridge & Iron
) is a Zacks Rank #2 (Buy).
Todd Bunton is the Growth & Income Stock Strategist for
and Editor of the
Income Plus Investor service
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