Two Reasons to Watch GVA and One to Stay Cautious

December 18, 2024 at 04:03 AM EST

GVA Cover Image

What a fantastic six months it’s been for Granite Construction. Shares of the company have skyrocketed 46%, hitting $91.78. This performance may have investors wondering how to approach the situation.

Is it too late to buy GVA? Find out in our full research report, it’s free.

Why Does GVA Stock Spark Debate?

Having played a role in the construction of the Hoover Dam, Granite Construction (NYSE: GVA) is a provider of infrastructure solutions for roads, bridges, and other projects.

Two Things to Like:

1. Outstanding Long-Term EPS Growth

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.

Granite Construction’s full-year EPS grew at an astounding 31.7% compounded annual growth rate over the last four years, better than the broader industrials sector.

Granite Construction Trailing 12-Month EPS (Non-GAAP)

2. New Investments Bear Fruit as ROIC Jumps

A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared 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. Over the last few years, Granite Construction’s ROIC has increased. This is a good sign, but we recognize its lack of profits during the COVID era contributed to its high growth.

Granite Construction Trailing 12-Month Return On Invested Capital

One Reason to be Careful:

Long-Term Revenue Growth Disappoints

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Regrettably, Granite Construction’s sales grew at a sluggish 2.8% compounded annual growth rate over the last five years. This fell short of our benchmarks. Granite Construction Quarterly Revenue

Final Judgment

Granite Construction has huge potential even though it has some open questions, and after the recent rally, the stock trades at 16.9× forward price-to-earnings (or $91.78 per share). Is now the right time to buy? See for yourself in our full research report, it’s free.

Stocks We Like Even More Than Granite Construction

The elections are now behind us. With rates dropping and inflation cooling, many analysts expect a breakout market to cap off the year - and we’re zeroing in on the stocks that could benefit immensely.

Take advantage of the rebound by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,691% between September 2019 and September 2024) as well as under-the-radar businesses like United Rentals (+550% five-year return). Find your next big winner with StockStory today for free.

About Us

About Cabling Installation & Maintenance

Contact Cabling Installation & Maintenance

Editorial

Advertising and Sponsorship Sales

Subscriptions and Memberships

Feedback/Problems