Granite wins $45 million I-40 rest area upgrade contract

WATSONVILLE, Calif. - Granite Construction Incorporated (NYSE:GVA) has secured a contract worth approximately $45 million from the California Department of Transportation (Caltrans) to renovate the John Wilkie Safety Roadside Rest Area on Interstate 40. The project is set to begin in September 2024 and reach completion by January 2026.

The initiative is part of a series of improvements aimed at enhancing safety and infrastructure along the I-40 corridor. This latest project involves the construction of a modern rest area that will provide a crucial safe spot for motorists to take a break, especially given the significant distance from the nearest town.

Granite has been involved in several past projects on I-40, which have included median fill-ins, slope flattening, and the creation of recovery areas for vehicles that veer off the highway. According to Bill Moore, Granite's Vice President of Regional Operations, the company's ongoing relationship with Caltrans has been instrumental in securing this latest project, reflecting a shared commitment to improving safety for travelers along the interstate.

The company plans to source 12,200 tons of high-quality, durable asphalt from Desert Cities Asphalt for the construction of parking lots and ramps as part of the rest area's modernization.

Granite, recognized as America's Infrastructure Company™, has a history dating back to 1922 and is considered one of the largest diversified construction and construction materials companies in the United States. The company prides itself on its ethical standards, industry-leading safety practices, and commitment to quality and sustainability.

This news is based on a recent press release statement from Granite.

In other recent news, Granite Construction Incorporated has reported a strong second quarter with a 22% increase in revenue within its Construction segment and an overall revenue surge of 20%. Additionally, the company saw a significant 60% rise in gross profit during this period. Furthermore, Granite Construction has announced the acquisition of Dickerson & Bowen, which is set to close in the third quarter, marking a strategic move to expand the company's presence in the Southeastern market.

Granite Construction has also secured a contract worth approximately $38 million from the California Department of Transportation (Caltrans) to enhance the Highway 101 corridor in southern Santa Barbara. This project, known as Segment 4E South, is the sixth Highway 101 mainline segment awarded to Granite under its Construction Manager/General Contractor (CMGC) contract, continuing a partnership with Caltrans and the Santa Barbara County Association of Governments (SBCAG).

Work on the Segment 4E South is expected to commence in September 2024, with an anticipated completion date in October 2026. The company's robust financial performance is supported by a $5.6 billion committed and awarded projects portfolio, indicating potential for continued growth. As part of its future plans, Granite Construction intends to increase disclosures around the Materials business in 2025 for better financial visibility and provide future targets for 2025, 2026, and 2027 in the upcoming third quarter.

InvestingPro Insights

As Granite Construction Incorporated (NYSE:GVA) embarks on the new Caltrans project to renovate the John Wilkie Safety Roadside Rest Area, investors and industry observers are closely monitoring the company's financial health and stock performance. Here are some key insights based on real-time data from InvestingPro:

Granite's market capitalization stands robust at $3.24 billion, reflecting the company's solid presence in the construction sector. With a forward-looking perspective, the company's net income is expected to grow this year, which might be a driving factor behind the two analysts who have recently revised their earnings estimates upwards for the upcoming period. This is indicative of potential confidence in Granite's financial prospects and operational efficiency.

InvestingPro Data shows a healthy revenue growth of 16.84% over the last twelve months as of Q2 2024, underscoring Granite's ability to expand its business and secure lucrative contracts like the one with Caltrans. The company's gross profit margin during the same period stands at 12.61%, which, while modest, is paired with an impressive EBITDA growth of 63.61%, signaling strong operational profitability.

From a stock performance perspective, Granite has exhibited a remarkable return over the last year, with an 82.46% increase in its price total return, nearly reaching its 52-week high at 98.32% of the peak price. This momentum is supported by the InvestingPro Tip that the stock is currently trading in overbought territory, according to the Relative Strength Index (RSI), hinting at the high investor interest and potential for the stock to be currently overvalued.

For investors seeking more detailed analysis, there are additional InvestingPro Tips available, which can offer deeper insights into Granite's performance and valuation metrics. These tips can be accessed through the dedicated InvestingPro platform, which provides a comprehensive suite of tools and data for informed investment decisions.

It's worth noting that Granite has maintained dividend payments for 35 consecutive years, a testament to its financial stability and commitment to shareholder returns, with a current dividend yield of 0.71%. This, along with the company's strong track record and the latest contract win, may continue to make it an attractive option for investors looking for steady growth and reliability in the infrastructure sector.

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