Tutor Perini (NYSE:TPC), a general contracting company, reported Q4 CY2024 revenue of $1.07 billion, falling short of analyst expectations of $1.08 billion. Despite a 4.5% year-over-year sales increase, this represents a 0.9% miss. The company also posted a GAAP loss of $1.51 per share, significantly below consensus estimates. However, Tutor Perini issued optimistic guidance for FY2025, projecting EPS of $1.70 at the midpoint, exceeding analyst forecasts by 5.3%. This begs the question: is Tutor Perini a worthwhile investment? Gain deeper insights into Tutor Perini’s performance and prospects in our comprehensive research report.
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Q4 CY2024 Performance Highlights
Tutor Perini’s Q4 results presented a mixed picture, with revenue falling short of projections but positive signals emerging in other areas:
- Revenue: $1.07 billion (vs. $1.08 billion estimated), a 4.5% year-over-year increase but a 0.9% miss.
- GAAP EPS: -$1.51 (vs. $0.10 estimated), a significant deviation from analyst predictions.
- FY2025 GAAP EPS Guidance: $1.70 at the midpoint, surpassing analyst estimates by 5.3%.
- Operating Margin: -8.1%, declining from -2.2% in Q4 CY2023.
- Free Cash Flow Margin: 30%, a substantial improvement from 11.8% in the same period last year.
- Backlog: $18.7 billion at quarter end.
- Market Capitalization: $1.21 billion.
CEO and President Gary Smalley highlighted the company’s record-breaking achievements in 2024, securing $12.8 billion in new awards, culminating in a record backlog of $18.7 billion and achieving a third consecutive year of record operating cash flow.
Company Overview: Tutor Perini in the Construction Landscape
Tutor Perini (NYSE:TPC), renowned for projects such as the Philadelphia Eagles’ Stadium, operates as a leading civil and building construction company, specializing in general contracting and design-build services. The company operates within the broader construction and maintenance services industry, characterized by specialized expertise, licensing requirements, and cyclical sensitivity to economic factors like interest rates.
Analyzing Tutor Perini’s Revenue Growth
Sustained revenue growth is a key indicator of a company’s long-term health. While Tutor Perini’s trailing 12-month sales of $4.33 billion indicate stagnation over the past five years, its two-year annualized revenue growth of 6.8% suggests a potential positive trend. This quarter’s 4.5% year-over-year revenue growth to $1.07 billion, though below estimates, aligns with this trajectory. Analysts project a 13.3% revenue growth over the next 12 months, signaling optimism for improved performance driven by new offerings.
Evaluating Operating Margin and Profitability
Tutor Perini’s historical profitability has been a concern, with a near-breakeven average operating profit over the past five years. A declining operating margin trend, exacerbated by a 5.9 percentage point drop to -8.1% in Q4, further emphasizes challenges in cost management and pricing power. This decrease suggests rising expenses, potentially in areas such as marketing, R&D, or administrative overhead, without a corresponding increase in revenue.
Assessing Earnings Per Share (EPS)
While Tutor Perini’s full-year earnings remain negative, the company has demonstrated a 16.6% annual improvement in EPS over the past five years. However, the two-year annual EPS growth of 3.8% falls short of the five-year trend. This quarter’s reported EPS of -$1.51 marks a decline from the previous year and missed analyst expectations. Despite this, analysts predict a significant turnaround, forecasting a positive EPS of $1.59 for the upcoming year.
Conclusion: A Mixed Outlook for Tutor Perini
Tutor Perini’s Q4 results present a mixed bag, with revenue and EPS misses counterbalanced by strong FY2025 EPS guidance and positive developments in free cash flow and backlog. The market reacted favorably to the optimistic outlook, with a 4.8% stock price increase following the earnings release.
The decision to invest in Tutor Perini requires a comprehensive assessment of valuation, business fundamentals, and the latest financial performance. Access our in-depth research report for a comprehensive analysis to inform your investment decisions.
