Granite Construction Incorporated Common Stock (GVA)

FairStock Score: 48/100 — MIXED

Key Financials

Strengths

• Generates $184 million in annual free cash flow (3.5% yield on market cap)
• Solid return on equity of 19.1% above cost of capital
• Revenue growth of 19.2% demonstrates strong top-line momentum

Concerns

• Trades significantly above Graham Number ($49) with negative 153% margin of safety—limited downside protection

AI Analysis

Granite Construction Incorporated Common Stock is a small-cap industrials company valued at $5.3 billion. The business generates $4.4 billion in annual revenue with a 1.2% net margin and $184 million in free cash flow. From a quality standpoint, Granite shows Altman Z-Score of 1.8 in the grey zone and adequate 19% ROE. On valuation, the stock is trading at a premium 31.8x earnings, with trades far above its Graham Number ($49) with no margin of safety. Growth dynamics show revenue growing at 19.2% and profit growth of 25.4%. Our composite FairStock Score of 48/100 reflects mixed fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Granite's 19% revenue growth trajectory could accelerate as it captures additional market share in the industrials sector. With $184 million in annual free cash flow (3.5% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 32x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer