On Mar 16, Zacks Investment Research downgraded
Great Lakes Dredge & Dock Corporation
(
GLDD
) to Zacks Rank #5 (Strong Sell).
Why the Downgrade?
Following the release of its fourth-quarter 2012 results on
Mar 14, which included a negative 94.4% surprise, earnings
estimates for the biggest dredging service provider in the U.S
witnessed a sharp downward revision. In the last 7 days, the
Zacks Consensus Estimate for 2013 decreased 8% to 56 cents per
share while that for 2014 went down 24% to 65 cents per
share.
Though Great Lakes' fourth-quarter revenues increased 31% to
$207.1 million, earnings plunged 92% to 1 cent, way short of
the Zacks Consensus Estimate of 18 cents. Despite reporting
record Dredging revenue of $190 million, up 54%, it was offset
by a 52% decline in demolition revenue to $16.6
million.
Gross profit during the quarter increased 19% to $237
million. However, gross margin contracted 100 basis points to
10.6% in the quarter, due to costs incurred in excess of
revenue related to pending change orders on certain demolition
projects, which was partially offset by an increase in revenue
in the dredging segment, specifically higher margin capital
projects. Adjusted EBITDA (earnings before interest, taxes,
depreciation and amortization) was $21.3 million, down 17.4%
from $25.8 million in the prior-year quarter.
Great Lakes disclosed that it had recognized revenue in 2012
in a manner not consistent with its accounting policy and
admitted failure of internal controls to detect or prevent
misstatements in its financial statements. Great Lakes further
revealed that 2012 second and third quarter demolition segment
revenues were overstated by $3.9 million and $4.3 million,
respectively.
Law firms are currently investigating potential accounting
and securities fraud at Great Lakes. Since the market's closing
on Mar 14, 2013, Great Lakes' shares declined $1.62 or 18%, to
close on March 15, 2013, at $7.36 per share, on unusually heavy
volume.
Other Stocks to Consider
Other stocks in the same industry that are favorable option
for investors are
Orion Marine Group Inc.
(
ORN
), with a Zacks Rank #1 (Strong Buy),
Chicago Bridge & Iron
(
CBI
) and
AECOM Technology Corporation
(
ACM
), both of which carry a Zacks Rank #2 (Buy).
Why the Downgrade?
Following the release of its fourth-quarter 2012 results on
Mar 14, which included a negative 94.4% surprise, earnings
estimates for the biggest dredging service provider in the U.S
witnessed a sharp downward revision. In the last 7 days, the
Zacks Consensus Estimate for 2013 decreased 8% to 56 cents per
share while that for 2014 went down 24% to 65 cents per
share.
Though Great Lakes' fourth-quarter revenues increased 31% to
$207.1 million, earnings plunged 92% to 1 cent, way short of the
Zacks Consensus Estimate of 18 cents. Despite reporting record
Dredging revenue of $190 million, up 54%, it was offset by a 52%
decline in demolition revenue to $16.6 million.
Gross profit during the quarter increased 19% to $237 million.
However, gross margin contracted 100 basis points to 10.6% in the
quarter, due to costs incurred in excess of revenue related to
pending change orders on certain demolition projects, which was
partially offset by an increase in revenue in the dredging
segment, specifically higher margin capital projects. Adjusted
EBITDA (earnings before interest, taxes, depreciation and
amortization) was $21.3 million, down 17.4% from $25.8 million in
the prior-year quarter.
Great Lakes disclosed that it had recognized revenue in 2012
in a manner not consistent with its accounting policy and
admitted failure of internal controls to detect or prevent
misstatements in its financial statements. Great Lakes further
revealed that 2012 second and third quarter demolition segment
revenues were overstated by $3.9 million and $4.3 million,
respectively.
Law firms are currently investigating potential accounting and
securities fraud at Great Lakes. Since the market's closing on
Mar 14, 2013, Great Lakes' shares declined $1.62, or 18%, to
close on March 15, 2013, at $7.36 per share, on unusually heavy
volume.
Other Stocks to Consider
Other stocks in the same industry that are favorable option
for investors are Orion Marine Group Inc. (ORN), with a Zacks
Rank #1 (Strong Buy), Chicago Bridge & Iron (CBI) and AECOM
Technology Corporation (ACM), both of which carry a Zacks Rank #2
(Buy).
AECOM TECH CORP (ACM): Free Stock Analysis
Report
CHICAGO BRIDGE (CBI): Free Stock Analysis
Report
GREAT LAKES DRG (GLDD): Free Stock Analysis
Report
ORION MARINE GP (ORN): Free Stock Analysis
Report
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