NV5 Global: Construction Gains

11/29/2016 10:00 am EST


Tom Bishop

Founder, BI Research

This recommended stock is a provider of professional and technical engineering and consulting solutions to public and private sectors, observes Tom Bishop, small cap specialist and editor of BI Research.

NV5 Global (NVEE) focuses on construction quality assurance, infrastructure engineering and support services, energy, program management and environmental solutions.

It has been in business for 65 years but only public since 2013. With Trump winning the election, NV5 seems to be one of the most likely candidates to benefit from increased spending to improve America’s infrastructure.

NV5 reiterated its expectation of reaching the $300 million run rate by year-end. It clearly has another acquisition or two in its sights, so is very optimistic of reaching that goal.

EPS projections for 2017, already up from $1.82 to $1.97 in the past few weeks, should follow suit. So that is a trend that is likely to benefit the share price going forward.

NV5 did report that the delay in passage of New Jersey’s $0.23 per gallon hike in the gasoline tax caused a temporary delay in a number of NJ transportation infrastructure projects, which are now back on track.

I should note that in the recent election NJ residents also approved an amendment that these funds should be reserved for transportation projects and not be used for general purposes.

For full year 2016 NV5 expects EPS in a range from $1.49 to $1.62, or about $1.56 at the mid-point, implying about $0.45 at the mid-point for Q4, right on the earlier consensus.

Given the revenue consensus for 2017 has increased $15 million so far to $287 million and that the EPS consensus has vaulted ahead $0.17 (about 10%) to $1.99 (which would be up 27% from this year’s estimated $1.56), NV5 is a Buy.

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