Granite Construction's (GVA -1.41%) third-quarter results came in above expectations, and the company said it remains on track to hit its long-term targets. Investors are excited about the opportunity, sending shares of Granite up as much as 15% in Tuesday trading.
Granite is building something special
Granite is a full-service construction and materials company specializing in large civic contracts. The company should be one of the big beneficiaries of a U.S. push to spend on infrastructure, but investors had some reason to worry heading into earnings season that economic uncertainty and government gridlock could delay big projects.
The latest quarter should provide reassurance. Granite earned $1.69 per share in the quarter on $1.1 billion in sales, besting the consensus estimate for $1.45 per share in earnings and $1.08 billion in revenue.
"These results demonstrate the strong progress we are making towards the goals identified in our strategic plan that we introduced just over two years ago," CEO Kyle Larkin said in a press release. "During this same time, we have also bolstered our materials business through both greenfield and bolt-on investments, and we improved segment margins."
Committed and awarded projects, a measure of Granite's backlog of future business, hit a record high of $5.6 billion in the quarter.
Is Granite stock a buy after its earnings blowout?
Granite has come a long way since 2019, when its stock was under pressure due to cost overruns from large civic projects. The company in the years since has focused on quality over quantity in terms of new business, focusing on projects that generate the best value for shareholders.
Larkin sees continued improvement on the horizon, saying, "we are growing revenue and increasing adjusted EBITDA margin and believe we are on track to reach our 2024 financial targets."
Shares of Granite have doubled over the past three years, but the company still trades below where it did before the trouble hit in 2019. If Larkin is correct and Granite is able to continue to build on this performance, Granite shares can go higher from here.
