General contracting company Tutor Perini (NYSE:TPC) missed Wall Street’s revenue expectations in Q4 CY2024 as sales rose 4.5% year on year to $1.07 billion. Its GAAP loss of $1.51 per share was significantly below analysts’ consensus estimates.
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Revenue: $1.07 billion vs analyst estimates of $1.08 billion (4.5% year-on-year growth, 0.9% miss)
EPS (GAAP): -$1.51 vs analyst estimates of $0.10 (significant miss)
EPS (GAAP) guidance for the upcoming financial year 2025 is $1.70 at the midpoint, beating analyst estimates by 5.3%
Operating Margin: -8.1%, down from -2.2% in the same quarter last year
Free Cash Flow Margin: 30%, up from 11.8% in the same quarter last year
Backlog: $18.7 billion at quarter end
Market Capitalization: $1.21 billion
“With an unprecedented $12.8 billion of new awards during the year, we grew our backlog to a new record of $18.7 billion in 2024 and delivered a third consecutive year of record operating cash flow that shattered our previous record by $200 million,” said Gary Smalley, Chief Executive Officer and President.
Known for constructing the Philadelphia Eagles’ Stadium, Tutor Perini (NYSE:TPC) is a civil and building construction company offering diversified general contracting and design-build services.
Construction and maintenance services companies not only boast technical know-how in specialized areas but also may hold special licenses and permits. Those who work in more regulated areas can enjoy more predictable revenue streams – for example, fire escapes need to be inspected every five years–. More recently, services to address energy efficiency and labor availability are also creating incremental demand. But like the broader industrials sector, construction and maintenance services companies are at the whim of economic cycles as external factors like interest rates can greatly impact the new construction that drives incremental demand for these companies’ offerings.
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Tutor Perini struggled to consistently increase demand as its $4.33 billion of sales for the trailing 12 months was close to its revenue five years ago. This wasn’t a great result and suggests it’s a low quality business.
Tutor Perini Quarterly Revenue
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Tutor Perini’s annualized revenue growth of 6.8% over the last two years is above its five-year trend, but we were still disappointed by the results.
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Tutor Perini Year-On-Year Revenue Growth
This quarter, Tutor Perini’s revenue grew by 4.5% year on year to $1.07 billion, falling short of Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 13.3% over the next 12 months, an improvement versus the last two years. This projection is commendable and implies its newer products and services will spur better top-line performance.
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Tutor Perini was roughly breakeven when averaging the last five years of quarterly operating profits, inadequate for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.
Looking at the trend in its profitability, Tutor Perini’s operating margin decreased by 7.4 percentage points over the last five years. Tutor Perini’s performance was poor no matter how you look at it – it shows costs were rising and that it couldn’t pass them onto its customers.
In Q4, Tutor Perini generated an operating profit margin of negative 8.1%, down 5.9 percentage points year on year. Since Tutor Perini’s operating margin decreased more than its gross margin, we can assume it was recently less efficient because expenses such as marketing, R&D, and administrative overhead increased.
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Although Tutor Perini’s full-year earnings are still negative, it reduced its losses and improved its EPS by 16.6% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability.
Tutor Perini Trailing 12-Month EPS (GAAP)
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For Tutor Perini, its two-year annual EPS growth of 3.8% was lower than its five-year trend. We hope its growth can accelerate in the future.
In Q4, Tutor Perini reported EPS at negative $1.51, down from negative $0.91 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast Tutor Perini’s full-year EPS of negative $3.11 will flip to positive $1.59.
We were impressed by Tutor Perini’s optimistic full-year EPS guidance, which blew past analysts’ expectations. On the other hand, its revenue and EPS in the quarter missed. Overall, this quarter was mixed. The market seemed to be focusing on the positives, and the stock traded up 4.8% to $22.94 immediately following the results.
So should you invest in Tutor Perini right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
