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Granite Construction Down to Strong Sell on Weak Earnings

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Zacks Investment Research downgraded Granite Construction Incorporated (GVA - Free Report) to a Zacks Rank #5 (Strong Sell) on Sep 30, 2015. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of underperforming the broader market in the near term.

Why the Downgrade?

Shares of Granite Construction dipped to a 52-week low of $29.32 on Sep 29, before closing a notch higher at $29.69. The company’s share price has been declining since it reported second-quarter results on Jul 30.

Granite Construction’s earnings per share declined 31% year over year to 24 cents. The bottom line also missed the Zacks Consensus Estimate of 42 cents by a wide margin of 43%. Net sales decreased 2.8% year over year to $569 million and also fell short of the Zacks Consensus Estimate of $624 million.

For 2015, Granite Construction expects consolidated revenue growth in the mid-single digits and consolidated EBITDA margin of 6% to 8%.

Further, Granite Construction’s estimates have undergone negative revisions over the past 60 days. The Zacks Consensus Estimate for the stock has decreased 8% to $1.56 per share for 2015 and 7% to $2.16 per share for 2016. Considering the weak results and outlook investors are dubious on Granite Construction’s growth prospects.

Stocks to Consider

Some better-ranked stocks in the sector include China Railway Construction Corporation Limited , China Railway Group Limited and Dycom Industries Inc. (DY - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy).

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