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NEW YORK (TheStreet) -- Granite Construction (GVA) has been upgraded by TheStreet Ratings from Hold to Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate GRANITE CONSTRUCTION INC (GVA) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Construction & Engineering industry average. The net income increased by 17.2% when compared to the same quarter one year prior, going from $13.04 million to $15.28 million.
- The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.13, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has significantly increased by 298.60% to $25.56 million when compared to the same quarter last year. In addition, GRANITE CONSTRUCTION INC has also vastly surpassed the industry average cash flow growth rate of -75.51%.
- GRANITE CONSTRUCTION INC has improved earnings per share by 15.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GRANITE CONSTRUCTION INC swung to a loss, reporting -$0.94 versus $1.14 in the prior year. This year, the market expects an improvement in earnings ($0.87 versus -$0.94).
- You can view the full analysis from the report here: GVA Ratings Report