Dredging and coastal protection company Great Lakes Dredge & Dock (NASDAQ: GLDD) beat Wall Street’s revenue expectations in Q1 CY2025, with sales up 22.3% year on year to $242.9 million. Its GAAP profit of $0.49 per share was 86.7% above analysts’ consensus estimates.

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Company Overview

Founded as Lydon & Drews dredging company, Great Lakes Dredge & Dock (NASDAQ: GLDD) provides dredging services, land reclamation, and coastal protection projects in the United States and internationally.

Sales Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, Great Lakes Dredge & Dock’s 1.8% annualized revenue growth over the last five years was sluggish. This was below our standards and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Great Lakes Dredge & Dock’s annualized revenue growth of 14.8% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

This quarter, Great Lakes Dredge & Dock reported robust year-on-year revenue growth of 22.3%, and its $242.9 million of revenue topped Wall Street estimates by 17.5%.

Looking ahead, sell-side analysts expect revenue to decline by 3.1% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and indicates its products and services will face some demand challenges.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Great Lakes Dredge & Dock has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 8%, higher than the broader industrials sector.

Analyzing the trend in its profitability, Great Lakes Dredge & Dock’s operating margin rose by 3 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, Great Lakes Dredge & Dock generated an operating profit margin of 20.6%, up 4.7 percentage points year on year. Since its gross margin expanded more than its operating margin, we can infer that leverage on its cost of sales was the primary driver behind the recently higher efficiency.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Great Lakes Dredge & Dock’s flat EPS over the last five years was below its 1.8% annualized revenue growth. However, its operating margin actually expanded during this time, telling us that non-fundamental factors such as interest expenses and taxes affected its ultimate earnings.

Diving into the nuances of Great Lakes Dredge & Dock’s earnings can give us a better understanding of its performance. A five-year view shows Great Lakes Dredge & Dock has diluted its shareholders, growing its share count by 4.1%. This dilution overshadowed its increased operating efficiency and has led to lower per share earnings. Taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Great Lakes Dredge & Dock, its two-year annual EPS growth of 84.3% was higher than its five-year trend. This acceleration made it one of the faster-growing industrials companies in recent history.

In Q1, Great Lakes Dredge & Dock reported EPS at $0.49, up from $0.31 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Great Lakes Dredge & Dock’s full-year EPS of $1.02 to shrink by 31.9%.

Key Takeaways from Great Lakes Dredge & Dock’s Q1 Results

We were impressed by how significantly Great Lakes Dredge & Dock blew past analysts’ revenue, EPS, and EBITDA expectations this quarter. Zooming out, we think this quarter featured some important positives. The stock traded up 13.5% to $10.84 immediately after reporting.

Indeed, Great Lakes Dredge & Dock had a rock-solid quarterly earnings result, but is this stock a good investment here? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.