Granite Construction Secures Highway Reconstruction Project

Diversified heavy civil contractor and construction materials producer, Granite Construction Incorporated (NYSE:GVA) has been awarded a reconstruction contract worth $22 million by the California Department of Transportation. The contract involves repair of State Route 14 in Indian Wells, CA.

Per the contract, Granite Construction will rebuild four miles of two-lane conventional highway to a four-lane expressway, which will provide access to the Eastern Sierra Mountain range.

The scope of work includes 170 acres of clearing, 600,000 cubic yards of excavation, creation of 300 linear feet of double ten feet by twelve feet reinforced box culvert, and 6,100 linear feet of storm drain, along with erosion control, striping, signage, fencing, and electrical work.

Granite Construction Incorporated Price

Granite Construction Incorporated Price | Granite Construction Incorporated Quote

Granite Construction will book the contract into the first-quarter 2017 backlog. Construction is scheduled to begin in second-quarter 2017 and will likely close by second-quarter 2018.

At the end of fourth-quarter 2016, Granite Construction recorded contract backlog of $3.48 billion, up 19.8% year over year. The company expects low-double digit consolidated revenue growth in 2017 and consolidated EBITDA margin of 6.5–7.5%.

In the last one year, Granite Construction underperformed the Zacks classified Building Products - Heavy Construction sub-industry with respect to price performance. The stock gained around 16.9%, while the industry recorded growth of 26.4%.

Recently Granite Construction’s shares witnessed a lift on the back of the California transportation bill's passage. The bill authorizes $52 billion in funding over the next ten years for the California Department of Transportation (Caltran) to use on transportation infrastructure. The bill also provides for $5 billion per year towards highway and transit repair projects.

The new bill will be beneficial for the company as it recorded around 9% of its revenue from Caltran in 2016. It will also help in near-term backlog growth.

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

Some better-ranked stocks in the sector include Boise Cascade Company (NYSE:BCC) , Louisiana-Pacific Corporation (NYSE:LPX) and Dycom Industries Inc. (NYSE:DY) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Boise Cascade has a positive earnings surprise of 517.51% for the trailing four quarters. Louisiana-Pacific has a remarkable average earnings surprise of 66.28% for the last four quarters, while Dycom Industries has an average earnings surprise of 17.30% for the past four quarters.

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