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Great Lakes Dredge & Dock Hits 24.7% EBITDA Margin: What's Next?
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Key Takeaways
Q1 2025 adjusted EBITDA margin of GLDD rose 230 bps year over year to reach 24.7%.
New fleet investments and public infrastructure funding are driving margin and revenue growth.
GLDD stock rose 31.8% in three months and trades at a discount to peers with rising EPS estimates.
Great Lakes Dredge & Dock Corporation’s (GLDD - Free Report) margin expansion is advocating its competitive ability to secure large-scale capital and coastal protection projects alongside mainstream dredging services. In the first quarter of 2025, its adjusted EBITDA margin and gross margin expanded year over year by 230 basis points (bps) to 24.7% and 570 bps to 28.6%, respectively. The company’s new build program, coupled with the favorable market backdrop of robust public infrastructure spending, is favoring this uptrend and positioning it for near- and long-term growth.
The new build program was launched in 2020 to renew and modernize Great Lakes Dredge & Dock’s fleet, especially for projects concerning coastal restoration and shoreline protection. Standing today, the company is almost done executing this initiative and will be wrapping it up by the end of 2025 or the beginning of 2026. As part of this program, it is currently undergoing construction of Acadia, the first U.S.-flagged Jones Act-compliant subsea rock installation vessel. Moreover, GLDD is optimistic about its prospective gains from the newest hopper dredge, the Amelia Island, designed specifically to work efficiently in shallow and narrow waters along the U.S. coastlines.
The support from increased government funding for infrastructure projects, at the state and federal levels, is another reason for the company witnessing top-line growth and margin expansion. The projects, being government-funded, reduce payment failure risks and increase revenue visibility, thus fostering margin growth.
Margin Status of Other Heavy Construction Firms
Sharing the space with GLDD, other construction market players, including Orion Group Holdings, Inc. (ORN - Free Report) and Granite Construction Incorporated (GVA - Free Report) , are also witnessing margin expansion trends thanks to the favorable public infrastructure spending backdrop.
Orion Group witnessed adjusted EBITDA margin expansion in its recently reported first-quarter 2025 earnings. Adjusted EBITDA margin was 4.3%, up year over year by 180 bps on the back of its resilient operating model and increased contract gains for large marine construction and new concrete projects. The government initiatives, including the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA), are favorably supporting Orion Group’s backlog, hence, fostering long-term revenue visibility and margin expansion.
Granite Construction is also benefiting from the favorable public infrastructure funding environment, resulting in incremental Committed and Awarded Projects (CAP) growth on the back of strong bidding opportunities. Improved project execution across its high-quality project portfolio and higher aggregates and asphalt volumes contributed to its first-quarter 2025 revenue growth and margin expansion. During the quarter, Granite Construction’s adjusted EBITDA margin expanded year over year by 190 bps to 4%.
GLDD Stock’s Price Performance & Valuation Trend
Shares of this dredging service provider have trended upward 31.8% in the past three months, significantly outperforming the Zacks Building Products - Heavy Construction industry, the broader Zacks Construction sector and the S&P 500 index.
Image Source: Zacks Investment Research
GLDD’s current valuation looks promising for investors. The stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 12.01X, as evidenced by the chart below. The discounted valuation of the stock, compared with its peers, advocates for an attractive entry point for investors. That said, in the long term, the valuation could move toward a premium, given the strong market fundamentals backing the company’s revenue visibility and profitability.
Image Source: Zacks Investment Research
EPS Trend of GLDD
GLDD’s earnings estimates for 2025 and 2026 have trended upward in the past 60 days by 39.1% to 96 cents per share and 11.8% to 95 cents per share, respectively. The estimated figure for 2025 implies 14.3% year-over-year growth, with the same for 2026 indicating a 0.4% decline.
Image: Bigstock
Great Lakes Dredge & Dock Hits 24.7% EBITDA Margin: What's Next?
Key Takeaways
Great Lakes Dredge & Dock Corporation’s (GLDD - Free Report) margin expansion is advocating its competitive ability to secure large-scale capital and coastal protection projects alongside mainstream dredging services. In the first quarter of 2025, its adjusted EBITDA margin and gross margin expanded year over year by 230 basis points (bps) to 24.7% and 570 bps to 28.6%, respectively. The company’s new build program, coupled with the favorable market backdrop of robust public infrastructure spending, is favoring this uptrend and positioning it for near- and long-term growth.
The new build program was launched in 2020 to renew and modernize Great Lakes Dredge & Dock’s fleet, especially for projects concerning coastal restoration and shoreline protection. Standing today, the company is almost done executing this initiative and will be wrapping it up by the end of 2025 or the beginning of 2026. As part of this program, it is currently undergoing construction of Acadia, the first U.S.-flagged Jones Act-compliant subsea rock installation vessel. Moreover, GLDD is optimistic about its prospective gains from the newest hopper dredge, the Amelia Island, designed specifically to work efficiently in shallow and narrow waters along the U.S. coastlines.
The support from increased government funding for infrastructure projects, at the state and federal levels, is another reason for the company witnessing top-line growth and margin expansion. The projects, being government-funded, reduce payment failure risks and increase revenue visibility, thus fostering margin growth.
Margin Status of Other Heavy Construction Firms
Sharing the space with GLDD, other construction market players, including Orion Group Holdings, Inc. (ORN - Free Report) and Granite Construction Incorporated (GVA - Free Report) , are also witnessing margin expansion trends thanks to the favorable public infrastructure spending backdrop.
Orion Group witnessed adjusted EBITDA margin expansion in its recently reported first-quarter 2025 earnings. Adjusted EBITDA margin was 4.3%, up year over year by 180 bps on the back of its resilient operating model and increased contract gains for large marine construction and new concrete projects. The government initiatives, including the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA), are favorably supporting Orion Group’s backlog, hence, fostering long-term revenue visibility and margin expansion.
Granite Construction is also benefiting from the favorable public infrastructure funding environment, resulting in incremental Committed and Awarded Projects (CAP) growth on the back of strong bidding opportunities. Improved project execution across its high-quality project portfolio and higher aggregates and asphalt volumes contributed to its first-quarter 2025 revenue growth and margin expansion. During the quarter, Granite Construction’s adjusted EBITDA margin expanded year over year by 190 bps to 4%.
GLDD Stock’s Price Performance & Valuation Trend
Shares of this dredging service provider have trended upward 31.8% in the past three months, significantly outperforming the Zacks Building Products - Heavy Construction industry, the broader Zacks Construction sector and the S&P 500 index.
Image Source: Zacks Investment Research
GLDD’s current valuation looks promising for investors. The stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 12.01X, as evidenced by the chart below. The discounted valuation of the stock, compared with its peers, advocates for an attractive entry point for investors. That said, in the long term, the valuation could move toward a premium, given the strong market fundamentals backing the company’s revenue visibility and profitability.
Image Source: Zacks Investment Research
EPS Trend of GLDD
GLDD’s earnings estimates for 2025 and 2026 have trended upward in the past 60 days by 39.1% to 96 cents per share and 11.8% to 95 cents per share, respectively. The estimated figure for 2025 implies 14.3% year-over-year growth, with the same for 2026 indicating a 0.4% decline.
Earnings Estimate Revision
Image Source: Zacks Investment Research
The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.