Investment Thesis
Granite Construction is experiencing severe financial deterioration with negative operating income, negative free cash flow of -$57M, and stalled revenue growth. The company cannot cover its interest obligations from operations (negative 2.3x interest coverage) while carrying $1.2B in debt, creating acute financial distress risk.
Strengths
- Maintains $265.7M in cash reserves providing near-term liquidity runway
- Gross profit of $109.9M demonstrates retained ability to generate some core business value
- EPS improved 47.3% YoY despite continued losses, indicating marginal operational stabilization
Risks
- Negative operating cash flow (-$30.9M) and free cash flow (-$57.0M) are structurally unsustainable and accelerate covenant breach risk
- Negative interest coverage ratio (-2.3x) means company cannot service $1.2B debt from operations, requiring asset sales or refinancing
- Zero YoY revenue growth combined with negative profitability (operating -3.4%, net -4.6%) across all margins indicates structural business deterioration
Key Metrics to Watch
- Operating cash flow trajectory - must turn positive within 2-3 quarters to avoid liquidity crisis
- Debt covenant compliance and refinancing terms - critical given negative cash generation
- Gross margin sustainability - 12% is dangerously thin; further erosion accelerates distress timeline
Financial Metrics
Revenue
912.5M
Net Income
-41.7M
EPS (Diluted)
$-0.96
Free Cash Flow
-57.0M
Total Assets
3.8B
Cash
265.7M
Profitability Ratios
Gross Margin
12.0%
Operating Margin
-3.4%
Net Margin
-4.6%
ROE
-4.0%
ROA
-1.1%
FCF Margin
-6.2%
Balance Sheet & Liquidity
Current Ratio
1.09x
Quick Ratio
0.97x
Debt/Equity
1.20x
Debt/Assets
0.0%
Interest Coverage
-2.32x
Long-term Debt
1.2B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T17:46:22.938124 |
Data as of: 2026-03-31 |
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