Even in the best of times, construction and civil engineering are tough businesses. Although construction services company Perini (NYSE:PCR) has shown itself tough enough to help rebuild Afghanistan and Iraq, investors gave fourth-quarter earnings a decidedly uncivil response.

Perini reported mixed results last Thursday. While full-year results were strong, fourth-quarter results were not so good. Revenue for the fourth quarter dropped 20%, and operating income was about 22% lower.

Revenues and profits were hurt primarily by a decline in the company's management services business on the order of 53%. As far and away the most profitable of Perini's three primary business lines, the decline clearly hurt the overall business. That said, the year-ago period did represent a record high for that division as a rapid rebuild program in Iraq boosted the business.

Backlog at the end of the year stood at $1.15 billion -- below the $1.24 billion level in September and the $1.67 billion level in 2003. Looking into 2005, the company expects revenue of between $1.5 billion and $1.8 billion, with earnings per share ranging from $0.95 to $1.15. It should be noted that the high end of both of those ranges is below 2004's full-year results.

While fourth-quarter results, backlog, and guidance were disappointing, management remains optimistic. During the conference call, it pointed to several high-value casino and hotel projects that were pending, albeit not in backlog, because final approvals and/or financing had not yet been obtained.

The company's operations in Afghanistan and Iraq continue to be a significant part of the business. As a reminder, Perini received numerous contracts to help rebuild what the U.S. military, in part, blew up during military operations. In January, though, Perini received a partial stop-work order on several government-funded projects in Iraq.

At present, the U.S. State Department is thinking about shifting some money from construction funds to Iraqi government agencies to help ignite that country's economic recovery. While a wide range of outcomes is possible (from no change to outright cancellation), management has conservatively decided to remove the $150 million or so involved from its backlog. Taking out the projects affected by the stop-work order, Perini still has a $132 million backlog in Iraq and a $93 million backlog in Afghanistan.

Though the ups and downs of Perini's revenue might be jarring for investors, that's the nature of the construction business. Moreover, shareholders can take some solace in the company's strong balance sheet ($136 million in cash with no debt), strong return on equity, and strong structural free cash flow generation. While this sort of business isn't for everybody, Fools looking for an underfollowed business trading at low multiples might want to do some due diligence on Perini.

Fool contributor Stephen Simpson, CFA, has no ownership interest in any stocks mentioned.