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Why Granite Construction's Shares Dropped

By Travis Hoium - Nov 4, 2013 at 3:00PM

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Is this meaningful or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of contractor Granite Construction (GVA 1.35%) dropped today after reporting third-quarter earnings.

So what: Revenue rose 2% in the third quarter to $741.6 million and net income dropped 70% to $11.0 million, or $0.28 per share. Analysts were expecting $900.8 million in revenue and earnings of $0.78 per share, so clearly investors were disappointed in the results.  

Now what: Revenue recognition in the construction business can be lumpy so I wouldn't get too worked up over any single quarter. The positive data point was that backlog increased to $2.8 billion at the end of last quarter from $1.6 billion a year ago. I don't think the results were as bad as they look on the surface and wouldn't change my investing thesis today.

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Granite Construction Incorporated Stock Quote
Granite Construction Incorporated
$29.24 (1.35%) $0.39

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