Granite Construction (GVA) just secured a roughly $324.8 million share of the Big Creek Tunnel contract in Cleveland, a joint venture project that feeds directly into its third quarter committed and awarded projects.
Against that new contract win, Granite Construction's share price has pulled back recently, with the 90 day share price return down 14.25% and the year to date share price return down 9.22%. At the same time, the 3 year total shareholder return sits above 200%, which suggests that long term holders have still seen substantial value creation despite the current loss of momentum.
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Granite Construction now pairs a fresh US$324.8 million tunnel award with a share price that has cooled after a strong multi year run. Does that setup still reward new risk takers at today's valuation, or mainly existing holders?
Most Popular Narrative: 37% Undervalued
Granite Construction closed at $107.73, while the most followed narrative anchors fair value at $171.67 using a 9.73% discount rate. That gap reflects a view that contract mix and the Materials platform could support higher long term earnings power than the current price implies.
U.S. public infrastructure programs still have a meaningful pool of unspent transportation funding, and proposals for successor legislation are expected to keep formula based spending elevated. This can support Granite Construction revenue growth and utilization of its record construction portfolio.
See why 4 investors see Granite Construction as 37% undervalued .
Result: Fair Value of $171.67 (UNDERVALUED)
Still, if severe weather again hits Materials margins or if real public construction spending slows as current federal programs mature, this Granite Construction narrative could be challenged.
Find out about the key risks to this Granite Construction narrative .
Next Steps
Mixed sentiment like this around Granite Construction can be a useful prompt to check the numbers yourself and act before the crowd catches up. To see both the upside arguments and the key issues people are worried about, start with the 3 key rewards and 1 important warning sign .
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include GVA .
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