GRANITE CONSTRUCTION INC (NYSE:GVA) – A Potentially Undervalued Stock with Solid Fundamentals

GRANITE CONSTRUCTION INC (NYSE:GVA) was identified by our stock screener as a decent value candidate. The company combines an attractive valuation with stable financial health, reasonable profitability, and steady growth. Below, we examine why GVA stands out as a potential opportunity for value investors.

Valuation (Score: 8/10)

GVA appears undervalued compared to industry peers and the broader market:

• The Price/Earnings (P/E) ratio of 21.06 is lower than 80.77% of its industry competitors.
• Its Price/Forward Earnings ratio of 13.81 is cheaper than 86.54% of peers.
• The Enterprise Value to EBITDA ratio suggests GVA is priced favorably within the construction sector.
• Analysts expect earnings to grow by 24.45% annually, which could justify a higher valuation in the future.

Financial Health (Score: 6/10)

The company maintains a stable financial position:

• A Debt-to-Equity ratio of 0.74 is manageable and in line with industry standards.
• Liquidity metrics (Current Ratio: 1.57, Quick Ratio: 1.44) indicate sufficient short-term solvency.
• The Altman-Z score of 3.34 suggests low bankruptcy risk.

Profitability (Score: 6/10)

GVA demonstrates consistent profitability:

• Return on Equity (12.45%) and Return on Assets (4.25%) outperform most industry peers.
• Profit margins (3.07%) have improved in recent years.
• Operating cash flow has remained positive over the past five years.

Growth (Score: 6/10)

The company shows promising growth trends:

• Earnings Per Share (EPS) grew by 27.93% in the past year.
• Revenue increased by 11.42% year-over-year.
• Future EPS growth is projected at 24.45% annually, though revenue growth may slow slightly.

For a deeper analysis, review the full fundamental report for GVA.

Our Decent Value Stocks screener lists more stocks with strong valuations and solid fundamentals.

Disclaimer

This is not investment advice. Always conduct your own research before making investment decisions.