Granite Construction’s Low Returns on Capital Point to Troubled Times Ahead
October 21, 2023
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Granite Construction ($NYSE:GVA), a construction company based in the United States, may be headed for troubled times. This is evidenced by its low returns on capital, which indicate that the company is not generating sufficient profits relative to the amount of capital it has invested. This suggests that the company’s profitability could be facing a long-term decline, which could spell trouble for its shareholders. Granite Construction is involved in a variety of construction projects across the United States, including highways and bridges, airports, water and wastewater treatment facilities, and affordable housing. It also provides engineering services for its clients, specializing in geotechnical and environmental engineering.
However, in recent years, its stock prices have fallen, and its returns on capital have been declining. As such, Granite Construction may be facing difficult times ahead.
Share Price
Granite Construction’s low returns on capital point to troubled times ahead. On Wednesday, GRANITE CONSTRUCTION stock opened at $36.8 and closed at $36.0, marking a decrease of 3.0% from its previous closing price of 37.1. This decrease in stock price is an indication of investors’ lack of confidence in the company’s future performance.
It appears that Granite Construction is not enjoying the same level of returns on capital that it had in the past. This lack of return is a sign that the construction industry may be in a downturn and that Granite Construction may soon be facing some difficult times ahead. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Granite Construction. More…
| Total Revenues | Net Income | Net Margin |
| 3.44k | 39.07 | 2.6% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Granite Construction. More…
| Operations | Investing | Financing |
| 39.98 | -105.69 | 96.53 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Granite Construction. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 2.38k | 1.44k | 19.91 |
Key Ratios Snapshot
Some of the financial key ratios for Granite Construction are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| -1.0% | 6.6% | 2.2% |
| FCF Margin | ROE | ROA |
| -2.6% | 5.2% | 2.0% |
Analysis
At GoodWhale, we analyze the fundamentals of GRANITE CONSTRUCTION so we can provide you with the best available information when it comes to making investment decisions. Our Risk Rating of GRANITE CONSTRUCTION is medium, meaning that it could be a worthwhile investment in terms of both financial and business aspects. However, we have detected 2 risk warnings within the income sheet and balance sheet, and if you register with us we can provide you with the full details. Don’t miss out on this opportunity to make an informed decision and get the best out of your investments. More…
Peers
The company has a long history of success and has completed many high-profile projects.
However, Granite Construction Inc is not the only construction company in the market and faces stiff competition from other companies such as IL&FS Engineering and Construction Co Ltd, PBA Infrastructure Ltd, and MBL Infrastructures Ltd.
– IL&FS Engineering and Construction Co Ltd ($BSE:532907)
IL&FS Engineering and Construction Co Ltd is an engineering and construction company that operates in the infrastructure sector in India. The company has a market cap of 2 billion as of 2022 and a return on equity of 7.54%. The company provides engineering, procurement, and construction services for a variety of infrastructure projects, including roads, bridges, tunnels, railways, and power plants.
– PBA Infrastructure Ltd ($BSE:532676)
PBA Infrastructure Ltd is an Australian engineering and infrastructure company. They have a market cap of 164.44M as of 2022 and a Return on Equity of 1.6%. PBA Infrastructure Ltd is involved in the design, construction, financing and operation of social and economic infrastructure assets.
– MBL Infrastructures Ltd ($BSE:533152)
MBL Infrastructures Ltd is an India-based engineering,procurement and construction (EPC) company. The Company is engaged in the business of civil construction, which includes roads, bridges, flyovers, buildings and irrigation. It also has a presence in the power sector. The Company’s segments include Construction and Power. Its Construction segment includes civil construction and other infrastructure development works. Its Power segment includes generation, transmission and distribution of power. The Company’s projects include National Highways, State Highways, Major District Roads, Rural Roads, City Roads, Bridges, Flyovers, Buildings, Water Supply and Sewerage Treatment Plants and Irrigation.
Summary
Investors analyzing Granite Construction should consider the company’s recent capital signal as a warning of potential difficulties ahead. The stock dropped on the same day the signal was released, suggesting that the market is expecting an uncertain future for the company. Investors should consider the company’s financial performance, the competitive landscape, and any potential risks or opportunities before making any decisions. They should also pay particular attention to the company’s cash flow and debt levels, which can help to assess the company’s financial health.
Additionally, investors must stay up-to-date on Granite Construction’s latest developments and any changes in their strategy or operations that could impact future performance. By considering all relevant factors, investors can make an informed decision on whether or not to invest in Granite Construction.
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