Tutor Perini currently trades at $27.19 per share and has shown little upside over the past six months, posting a middling return of 3.1%. The stock also fell short of the S&P 500’s 9.2% gain during that period.

Is now the time to buy Tutor Perini, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it’s free.

We're swiping left on Tutor Perini for now. Here are three reasons why we avoid TPC and a stock we'd rather own.

Why Do We Think Tutor Perini Will Underperform?

Known for constructing the Philadelphia Eagles’ Stadium, Tutor Perini (NYSE:TPC) is a civil and building construction company offering diversified general contracting and design-build services.

1. Long-Term Revenue Growth Flatter Than a Pancake

A company’s long-term sales performance signals its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Tutor Perini struggled to consistently increase demand as its $4.28 billion of sales for the trailing 12 months was close to its revenue five years ago. This fell short of our benchmarks and is a sign of poor business quality.

2. EPS Trending Down

Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

Sadly for Tutor Perini, its EPS declined by 37.5% annually over the last five years while its revenue was flat. This tells us the company struggled because its fixed cost base made it difficult to adjust to choppy demand.

3. New Investments Fail to Bear Fruit as ROIC Declines

ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

We typically prefer to invest in companies with high returns because it means they have viable business models, but the trend in a company’s ROIC is often what surprises the market and moves the stock price. Tutor Perini’s ROIC has decreased significantly over the last few years. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

Final Judgment

We cheer for all companies making their customers lives easier, but in the case of Tutor Perini, we’ll be cheering from the sidelines. With its shares lagging the market recently, the stock trades at 17.4× forward price-to-earnings (or $27.19 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. There are superior stocks to buy right now. Let us point you toward the most entrenched endpoint security platform on the market.

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