Granite Construction Incorporated GVA secured a civil work contract from the U.S. Army Corps of Engineers (USACE). The contract aims at mitigating flood risk and damage in Wharton, TX. The estimated value of the contract is $48 million and will be sourced from the USACE's fiscal 2023 civil construction funds. It is expected to be included in Granite's second-quarter Committed and Awarded Projects (CAP).
The scope of work involves constructing strategically positioned levee reaches, gravity sump areas, storm sewer relief systems and conducting slope repair activities along the Colorado River. These critical measures aim to strengthen the city's defences and reduce the impact of future flood events. The company is excited to showcase its expertise in performing USACE civil works within this market. The project is scheduled to commence in September 2023 and is expected to be completed in December 2024.
Focus on CAP Bodes Well
The Construction segment and the performance of the operating segments showcased strong market growth in first-quarter fiscal 2023, with CAP reaching a $5.1 billion. The upside is built on momentum from the most recent quarters, reflecting strategic expansion. Despite unfavorable weather conditions, the company's strategic approach of selective bidding resulted in increased margins and a higher number of projects won in the quarter.
During the first quarter of fiscal 2023, the California Group reported CAP of $1.9 billion, up 29% from the prior year quarter levels. Despite budget challenges, bidding activity in the state remained robust, driven by the Federal Infrastructure Bill (IIJA). The bill presented a range of opportunities. Notably, three middle mile broadband infrastructure projects were awarded during this quarter, contributing $132 million to California's CAP. With California moving swiftly to capitalize on IIJA funding, Granite is well positioned to partner with Caltrans in the construction of these projects.
The company's largest revenue group in 2022, Mountain Group reported CAP $364 million in first-quarter fiscal 2023, up 34% from previous quarter’s levels and a remarkable 40% increase since the first quarter of 2022. The Alaska region played a key role in this growth, with a notable increase of $215 million, primarily driven by the successful booking of two best-value projects during the quarter.
The federal division experienced a CAP increase, primarily attributed to a newly awarded contract worth $126 million by Naval Facilities Engineering Systems command (NAVFAC). The company is optimistic about the continued CAP growth throughout 2023, as additional projects funded by the IIJA become available for bidding.
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Shares of GVA have surged 34.8% in the past year compared with the Zacks Building Products - Heavy Construction industry’s rise of 47.4%.
Zacks Rank & Key Picks
Granite Construction currently carries a Zacks Rank #3 (Neutral).
Some better-ranked stocks from the Zacks Construction sector are:
Dycom Industries, Inc. DY sports a Zacks Rank #1 (Strong Buy). DY has a trailing four-quarter earnings surprise of 153.7%, on average. Shares of DY have gained 15.4% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for DY’s 2024 sales and earnings per share (EPS) indicates a rise of 8.3% and 41%, respectively, from the year-ago period’s levels.
Eagle Materials Inc. EXP sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 6.5%, on average. Shares of EXP have increased 59.5% in the past year.
The Zacks Consensus Estimate for EXP’s 2024 sales and EPS indicates a rise of 2% and 8.4%, respectively, from the year-ago period’s levels.
Martin Marietta Materials, Inc. MLM flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 31%, on average. Shares of MLM have increased 43.4% in the past year.
The Zacks Consensus Estimate for MLM’s 2023 sales and EPS indicates a rise of 18.4% and 31.7%, respectively, from the year-ago period’s levels.
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