Investment Thesis
Tutor Perini demonstrates strong fundamental growth with 28% revenue expansion and exceptional 149% net income growth, indicating improving operational efficiency and leverage. The company generates substantial free cash flow ($129M, 9.3% FCF margin) with a conservative balance sheet (0.33x Debt/Equity), providing financial flexibility to weather cyclicality. However, thin net margins (1.8%) and weak returns on capital (ROA 0.5%, ROE 2.1%) reflect the competitive construction sector and warrant cautious monitoring of cost discipline.
Strengths
- Strong YoY revenue growth of 28.1% signals robust market demand and project execution
- Exceptional net income growth of 149% YoY indicates significant operating leverage and cost management improvements
- Substantial free cash flow generation of $128.9M with 9.3% FCF margin demonstrates cash conversion strength
- Conservative leverage at 0.33x Debt/Equity with $803M cash provides financial flexibility
- Positive operating cash flow of $146.9M supports dividend potential and debt reduction
Risks
- Extremely thin net margin of 1.8% leaves minimal buffer against material cost inflation or labor pressures
- Weak returns on capital (ROA 0.5%, ROE 2.1%) indicate inefficient capital allocation relative to asset base
- Construction industry cyclicality exposes earnings to economic downturns and project delays
- Limited pricing power typical of competitive bidding environment constrains margin expansion potential
- Interest coverage ratio of 3.1x is adequate but leaves limited margin for revenue disruption
Key Metrics to Watch
- Gross margin trend - watch for deterioration from rising material/labor costs
- Operating cash flow and free cash flow conversion - monitor sustainability of 9.3% FCF margin
- Backlog and pipeline growth - indicators of revenue sustainability beyond current period
- Debt/Equity ratio and leverage levels - ensure conservative financial position maintained
- Project profitability and contract margins - track quality of earnings in new projects
Financial Metrics
Revenue
1.4B
Net Income
25.7M
EPS (Diluted)
$0.48
Free Cash Flow
128.9M
Total Assets
5.1B
Cash
803.0M
Profitability Ratios
Gross Margin
11.1%
Operating Margin
4.3%
Net Margin
1.8%
ROE
2.1%
ROA
0.5%
FCF Margin
9.3%
Balance Sheet & Liquidity
Current Ratio
1.28x
Quick Ratio
1.28x
Debt/Equity
0.33x
Debt/Assets
75.4%
Interest Coverage
3.07x
Long-term Debt
398.9M
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: 2026-05-08T12:44:15.403321 |
Data as of: 2026-03-31 |
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