Great Lakes Dredge & Dock Corporation (GLDD Quick QuoteGLDD - Free Report) has won two key dredging contracts worth $186.6 million.

Great Lakes shares jumped 9.5% during the trading session on Jun 1, 2023.

The first contract, the Freeport Harbor Channel Improvement Project, entails Great Lakes to deepen the channel to authorize depths of 51 to 56 feet. This will make the Port of Freeport the deepest port in Texas. This project, which is the third-largest domestic award of GLDD, will open the state to larger ships. Work under this project is expected to start in the second half of 2023 and is anticipated to be completed in the fourth quarter of 2025.

Notably, the Freeport Harbor Channel Improvement Project is one of the first capital projects awarded by the U.S. Army Corps of Engineers in 2023. GLDD expects many more capital projects to enter the market before 2023-end.

The second contract, the Galveston Entrance Channel and Houston Ship Channel (Bolivar to Redfish) Dredging Project comprises maintenance dredging work. Per the contract, Great Lakes will maintain associated channel depths. The work under this contract is expected to start in the second half of 2023 and has an estimated completion in the first quarter of 2024.

Both contracts are federally funded and intended for the U.S. Army Corps of Engineers, Galveston District.

Strong Bidding: A Boon

Great Lakes is the largest provider of dredging services in the United States. The company mainly banks on strong domestic dredging operations, high equipment utilization, solid project execution and savings from restructuring.

In the first quarter of 2023, the total bid market was more than $300 million, approximately 71% higher than first-quarter 2022. The port deepening and widening projects that were delayed in 2022 have started to enter the market.

The first quarter bid also includes one capital project. The company ended the quarter with $327.1 million of dredging backlog, which does not include its third largest domestic capital project in history, worth $160 million.
 

Image Source: Zacks Investment Research

GLDD stock has gained 16.7% year to date compared with the Zacks Building Products - Heavy Construction industry’s 14.2% rise.

We believe the company’s strong bidding ability and project execution, along with improved market conditions, fleet adjustment and cost-reduction initiatives, will boost its performance in 2023 and beyond.

Zacks Rank & Key Picks

Currently, GLDD carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the Zacks Construction sector are:

Willdan Group, Inc. (WLDN Quick QuoteWLDN - Free Report) , presently sports a Zacks Rank #1 (Strong Buy), is a nationwide provider of professional, technical and consulting services to utilities, government agencies and private industry. You can see the complete list of today’s Zacks #1 Rank stocks here.

WLDN’s expected earnings growth rate for 2023 is 39.8%.

Sterling Infrastructure, Inc. (STRL Quick QuoteSTRL - Free Report) , currently carries a Zacks Rank #2 (Buy), provides transportation, e-infrastructure and building solutions.

STRL’s expected earnings growth rate for 2023 is 11.4%.

Howmet Aerospace Inc. (HWM Quick QuoteHWM - Free Report) , presently holds a Zacks Rank #2, is a global manufacturer of engineered products serving the aerospace, defense and commercial transportation industries. The company is expected to benefit from higher aircraft production rates and ease of supply chains in the transportation market. Importantly, share gains in the titanium aerospace market are expected to act as a major growth tailwind.

HWM’s earnings for 2023 are expected to grow 20.7%.