Tutor Perini: Building Gains in Infrastucture

06/12/2020 5:00 am EST


Taesik Yoon

Editor, Forbes Investor and Forbes Special Situation Survey

Tutor Perini Corp. (TPC), a leading infrastructure contracting firm, shot up after reporting Q1 results on May 6 that crushed expectations, explains growth stock expert Taesik Yoon, editor of Forbes Investor.

Revenue jumped 30.5% year-over-year to $1.25 billion while earnings soared to 34 cents per share from a net loss of a penny in the prior year as the company enjoyed strong growth across all segments. This was led by its Civil and Specialty Contractors businesses where revenue climbed 46% and 47%, respectively.

These gains were a result of large infrastructure projects that accelerated, including Newark Airport Terminal One, the Purple Line Extension projects in Los Angeles, California High-Speed Rail and Minneapolis Southwest Light Rail.

In fact, this was TPC’s strongest Q1 revenue growth in eight years and exceeded the consensus estimate by $52.5 million. Similarly, the earnings represented the highest Q1 mark in ten years and were nearly six times greater than the 6 cents per share analysts had been anticipating. This even 11 cents above the 23 cents that they originally projected the company to earn prior to the pandemic.

What’s more, despite the greater-than-expected amount of work performed on its various projects and the pandemic depressing new contract activity, TPC still booked about $600 million in new awards and adjustments to contracts in process thanks in part to three military projects won in North Carolina and Florida and a mining project in Alabama. 

Fortunately, because most of its projects have been deemed essential and have largely been unaffected by the coronavirus, it doesn’t currently foresee any adverse material impact from the pandemic on its financial results in 2020.

As a result, TPC did something that few have done — it reaffirmed its full-year earnings guidance for $1.80-2.10 per share. In hindsight, it’s hard to believe that TPC’s shares sank to as low as $2.61 during the worst of the coronavirus-driven market sell-off in March. 

But perhaps more surprising is the fact that even with its post-earnings surge and the favorable outlook the company provided, they remain down 31% from the $15.12 they climbed to in early March following its Q4 announcement in late February. Thus, we think there’s plenty of upside left in TPC’s stock.

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