Granite Construction (GVA) AI Stock Analysis

Company Guidance

Granite is targeting organic revenue CAGR of 10% to 12% through 2029, with future M&A expected to be additive, an adjusted EBITDA margin of 14% to 16%, SG&A of approximately 7.5% of revenue, operating cash flow of approximately 13% of revenue, CapEx of approximately 3% of revenue and free cash flow of approximately 10% of revenue, while maintaining a long-term net leverage target of approximately 2.5x; core transportation is expected to grow in the mid-single digits through 2029, federal work is expected to represent approximately 15% of Construction segment revenue this year, rail could be closer to 5% in 2027 and pushing up closer to 10% of Construction segment revenue by 2028, and mission-critical infrastructure revenue can grow to at least 10% of Construction segment revenue over the next several years. For 2026, revenue guidance is $5.4 billion to $5.5 billion, with the revised range reflecting approximately 15% organic growth and approximately 9% growth from acquired businesses at the midpoint, operating cash flow is expected to be approximately 11% of revenue, and all other 2026 guidance assumptions are maintained; 2027 organic revenue growth is now expected at 10% to 12%. The company expects continued 50 basis point improvement each year over the next 3 years in both Construction and Materials gross profit margins, approximately 45% of eligible aggregate facilities to be automated by the end of 2026, approximately $1 per ton of benefit from automation investments, 2 or 3 more deals completed this year with total spend up to about $750 million if all 3 deals get across the finish line, year-end CAP burn of somewhere between 40% to 50%, or somewhere maybe 45% to 50%, next year’s aggregate price increases at kind of that mid -- a little bit higher price increases, asphalt pricing at low single digit, and volume in the upward kind of slightly upwards.