Tutor Perini Corporation

TPC Details

Tutor Perini Corporation (NYSE: TPC) is a global construction business that provides private clients and government organizations with general contracting, construction management, and design-build services. TPC's services comprise general contracting, pre-construction planning, comprehensive project management services, and self-performed construction services (site work, concrete forming and placement, electrical, plumbing, ventilation, etc.).

Latest News:

• Key Commercial Contract: On February 28, 2022, TPC announced that FortisBC Energy, Inc. had awarded its subsidiary, Frontier-Kemper Constructors ("Frontier-Kemper"), a contract worth approximately CAD$341 million (USD$267 million) for the tunnel component of the Eagle Mountain - Woodfibre Gas Pipeline project. The project entails building a nine-kilometer tunnel between Squamish, British Columbia, Canada, and the Woodfibre LNG industrial site southwest of downtown Squamish, using two tunnel boring machines.

FY21 Results:

• Decline in Topline: The company reported a YoY 12.73% decline in revenue to USD 4.64 billion in FY21 (ended December 31, 2021) from USD 5.32 billion in FY20, attributable to YoY decline of 28.04% in Building Segment.
• Reduction in Profitability: In FY21, TPC's net income dropped to USD 134.15 million from USD 152.34 million in FY20.
• Cash and Debt Position: The company had USD 202.20 million in cash and cash equivalents as of December 31, 2021, and total debt of USD 993.65 million.

Key Risk:

• Dependence on Government Projects: TPC relies on federal, state, and local governments for civil construction projects. In FY21, it derived 66% of its revenue from federal, state, and local governments for civil construction customers. As a result, any decrease or delay in government investment for such projects could negatively influence the company's financial performance.

Outlook:

• FY22 Guidance: As of FY21, TPC expects its FY22 EPS to range between USD 1.15 – USD 1.60.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation 

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation:

TPC's stock price has fallen 41.97% in the past nine months and has made a new 52-Week low today. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 11.27.

Considering the significant correction in the stock price, recent commercial contract, reduction in debt, positive outlook, associated risks, and current valuation, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 9.29, down 5.20% as of March 01, 2022.

Three-Year Technical Price Chart (as on March 01, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.