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5 Reasons to Dump Granite Construction (GVA) from Portfolio
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Granite Construction Incorporated (GVA - Free Report) has been disappointing investors of late. Shares of this diversified heavy civil contractor and construction materials producer has dipped 3.4% year to date. Here we highlight five reasons why it might not be an attractive pick for your portfolio at the moment.
Disappointing Fourth-Quarter 2016; Lackluster Guidance: Granite Construction reported fourth-quarter 2016 earnings per share of 40 cents, down 44% year over year from 72 cents in the year-ago quarter. The bottom line also missed the Zacks Consensus Estimate of 53 cents. Results were negatively impacted by weakness particularly in the Large Project Construction segment. The company expects low-double digit consolidated revenue growth in 2017 and consolidated EBITDA margin of 6.5–7.5%.
Negative Earnings Surprise History: The company has delivered negative earnings surprise in all the trailing four quarters with an average earnings surprise of 44.65%.
Estimates Moving South: The estimates for the company for first-quarter fiscal 2017, fiscal 2017 and fiscal 2018, have moved south in the past 30 days, reflecting the negative outlook of analysts on the company.
For the first quarter, there have been three downward estimate revisions in the past 30 days with no upward movement. Likewise, for fiscal 2017, we have seen three estimates moving down in the past 30 days, compared with no upward revisions. Similarly for fiscal 2018, two estimates have been revised downwards.
For first-quarter fiscal 2017, the Zacks Consensus Estimate has gone down to a loss of 19 cents per share from the prior estimate of a loss of 11 cents in the past 30 days. For fiscal 2017, the estimate has gone down 11% to $2.10 and for fiscal 2018, the estimate has declined 11% to $2.99 per share.
Falling Behind the Industry: In the last one year, Granite Construction has underperformed the Zacks classified Building Products - Heavy Construction sub-industry with respect to price performance. The stock gained around 21.3%, while the industry rose 33% in the same time frame.
Poor Rank; Expensive Valuation: Granite Construction currently carries a Zacks Rank #5 (Strong Sell). The company’s stretched valuation is a concern. In case of Granite Construction, the trailing twelve months price earnings (P/E) ratio is 38.22 while the Zacks categorized Building Products - Heavy Construction industry average trailing twelve months P/E ratio is pegged much lower at 16.87. This implies that the stock is overvalued and hence, we caution the investors against entering the stock at this point.
Owens Corning has an average positive earnings surprise of 35.13% in the trailing four quarters. Dycom has an average earnings surprise of 17.30% in the last four quarters, while Louisiana-Pacific has an average earnings surprise of 66.28% in the same time frame.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? Last year's market-beating Top 10 portfolio produced 5 double-digit winners. For example, oil and natural gas giant Pioneer Natural Resources and First Republic Bank racked up stellar gains of +44.9% and +44.3% respectively. Now a brand-new list for 2017 has been hand-picked from 4,400 companies covered by the Zacks Rank. See the 2017 Top 10 right now>>
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5 Reasons to Dump Granite Construction (GVA) from Portfolio
Granite Construction Incorporated (GVA - Free Report) has been disappointing investors of late. Shares of this diversified heavy civil contractor and construction materials producer has dipped 3.4% year to date. Here we highlight five reasons why it might not be an attractive pick for your portfolio at the moment.
Disappointing Fourth-Quarter 2016; Lackluster Guidance: Granite Construction reported fourth-quarter 2016 earnings per share of 40 cents, down 44% year over year from 72 cents in the year-ago quarter. The bottom line also missed the Zacks Consensus Estimate of 53 cents. Results were negatively impacted by weakness particularly in the Large Project Construction segment. The company expects low-double digit consolidated revenue growth in 2017 and consolidated EBITDA margin of 6.5–7.5%.
Negative Earnings Surprise History: The company has delivered negative earnings surprise in all the trailing four quarters with an average earnings surprise of 44.65%.
Estimates Moving South: The estimates for the company for first-quarter fiscal 2017, fiscal 2017 and fiscal 2018, have moved south in the past 30 days, reflecting the negative outlook of analysts on the company.
For the first quarter, there have been three downward estimate revisions in the past 30 days with no upward movement. Likewise, for fiscal 2017, we have seen three estimates moving down in the past 30 days, compared with no upward revisions. Similarly for fiscal 2018, two estimates have been revised downwards.
For first-quarter fiscal 2017, the Zacks Consensus Estimate has gone down to a loss of 19 cents per share from the prior estimate of a loss of 11 cents in the past 30 days. For fiscal 2017, the estimate has gone down 11% to $2.10 and for fiscal 2018, the estimate has declined 11% to $2.99 per share.
Falling Behind the Industry: In the last one year, Granite Construction has underperformed the Zacks classified Building Products - Heavy Construction sub-industry with respect to price performance. The stock gained around 21.3%, while the industry rose 33% in the same time frame.
Poor Rank; Expensive Valuation: Granite Construction currently carries a Zacks Rank #5 (Strong Sell). The company’s stretched valuation is a concern. In case of Granite Construction, the trailing twelve months price earnings (P/E) ratio is 38.22 while the Zacks categorized Building Products - Heavy Construction industry average trailing twelve months P/E ratio is pegged much lower at 16.87. This implies that the stock is overvalued and hence, we caution the investors against entering the stock at this point.
Stocks to Consider
Some better-ranked stocks in the construction sector include Owens Corning (OC - Free Report) , Dycom Industries, Inc. (DY - Free Report) and Louisiana-Pacific Corporation (LPX - Free Report) . All of the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Owens Corning has an average positive earnings surprise of 35.13% in the trailing four quarters. Dycom has an average earnings surprise of 17.30% in the last four quarters, while Louisiana-Pacific has an average earnings surprise of 66.28% in the same time frame.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? Last year's market-beating Top 10 portfolio produced 5 double-digit winners. For example, oil and natural gas giant Pioneer Natural Resources and First Republic Bank racked up stellar gains of +44.9% and +44.3% respectively. Now a brand-new list for 2017 has been hand-picked from 4,400 companies covered by the Zacks Rank. See the 2017 Top 10 right now>>