Granite Construction Incorporated GVA won a $34 million contract to implement seismic improvements at the Oakland International Airport (OAK) Perimeter Dike.

This vital infrastructure project aims to protect the airport’s runway from potential water intrusion from the nearby San Francisco Bay. Partial funding is provided by the Federal Aviation Administration, and the project will be recorded in Granite’s third-quarter CAP.

The upgrade will focus on strengthening 4,200 linear feet of the dike using cement deep soil mixing (CDSM), a method that reinforces levee soils to mitigate the risk of failure during earthquakes. Keller North America, Inc. is handling the CDSM scope, which includes 62,295 cubic yards of soil improvement. Additional work involves environmental protection, road restoration, and fuel line safeguarding.

Construction is slated to begin in first-quarter 2025 and conclude by third-quarter 2026.

Granite Boosts Top Line on Solid CAP

GVA is focused on growing a high-quality CAP portfolio within the Construction segment on the back of a positive public funding environment and resilient private market.

Granite’s CAP consists of two components, namely unearned revenue and other awards. Unearned revenue includes revenues GVA expects to record in the future on executed contracts. Other awards include the general construction portion of construction management/general contractor contracts, as well as deals with unexercised contract options or unissued task orders.

What’s Boosting GVA’s Shares?

Shares of GVA soared 33.8% in the past three months compared with the Zacks Building Products - Heavy Construction industry’s 19.6% growth. GVA has been consistently receiving contracts on the back of its solid execution efforts. Also, it has been diversifying and expanding its business through acquisitions and investments.

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As the construction industry continues to evolve, Granite's strategic expansion positions it as a formidable player in the market. GVA has been bolstering its materials business through both greenfield and bolt-on investments, and improved segment margins.

For 2024, GVA expects revenues within $3.9-$4 billion, SG&A, as a percentage of revenues, in the 7.5-8% range and adjusted EBITDA margin of 9.5-11.5%. In 2023, Granite reported revenues of $3.5 billion, SG&A of 8.4% and adjusted EBITDA margin of 8%.

Earnings per share (EPS) estimates for 2024 have remained stable at $5.24 in the past 60 days, indicating 66.9% year-over-year growth. The company’s EPS topped analysts’ expectations in three of the past four quarters, with an average of 26.4%.

GVA’s Zacks Rank & Key Picks

Granite currently carries a Zacks Rank #3 (Hold).

Here are some better-ranked stocks from the Zacks Construction sector:

Latham Group, Inc. SWIM: Based in Latham, NY, the company stands as the leading designer, manufacturer and marketer of in-ground residential swimming pools and pool accessories. It presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SWIM’s 2024 EPS remained stable at 13 cents in the past 60 days. The estimated figure indicates 750% year-over-year growth.

Knife River Corporation KNF: Headquartered in Bismarck, ND, this firm offers construction materials and contracting services throughout the United States, specializing in aggregates-based solutions.  It presently flaunts a Zacks Rank #1.

KNF has seen an upward estimate revision for 2024 EPS to $3.72 from $3.57 over the past 60 days. The estimated figure indicates 15.2% year-over-year growth for 2024.

Frontdoor, Inc. FTDR: Based in Memphis, TN, this company provides home warranties in the United States. It presently sports a Zacks Rank of 1.

FTDR has seen an upward estimate revision for 2024 EPS to $2.79 from $2.70 over the past 60 days. The estimated figure indicates 21.3% year-over-year growth.

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