Granite Construction (GVA) AI Stock Analysis

• Market Cap: $5.92B
• Dividend Yield: 0.45%
• Average Volume (3M): 583.76K
• Price to Earnings (P/E): 37.5
• Beta (1Y): 1.04
• Revenue Growth: 6.87%
• EPS Growth: 64.56%
• Country: US
• Employees: 2,300
• Sector: Industrials
• Sector Strength: 72
• Industry: Engineering & Construction
• EPS (TTM): 1.03
• Shares Outstanding: 43,503,674
• 10 Day Avg. Volume: 576,764
• 30 Day Avg. Volume: 583,763
• PEG Ratio: 0.49
• Price to Book (P/B): 4.27
• Price to Sales (P/S): 1.14
• P/FCF Ratio: 15.23
• Enterprise Value/Market Cap: 1.16
• Enterprise Value/Revenue: 1.55
• Enterprise Value/Gross Profit: 9.63
• Enterprise Value/Ebitda: 13.65
• 1Y Price Target: $143.50
• Price Target Upside: 5.93% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): 5.54
• Revenue Forecast (FY): $4.88B

• Rating: 70 Outperform
• Price Target: $141.00 ▲(4.08% Upside)
• Action: Upgraded Date: 02/18/26
• Date: Action: Upgraded 02/18/26

The score is driven primarily by improved profitability/cash generation and strong technical momentum, supported by upbeat 2026 guidance and record backlog. Offsetting these positives are a weaker valuation (high P/E/low yield) and increased leverage plus top-line/cash-flow volatility signals.

Positive Factors

Record backlog (CAP) growth

A record $7B backlog with ~48% best-value work provides multi-quarter revenue visibility and a higher-quality project mix. This durable backlog reduces bidding risk, supports steady revenue conversion, and underpins sustainable margin improvement over the next several quarters.

Materials business transformation & reserves

A 34% reserve increase and Materials margin expansion to ~26% reflect vertical integration and strategic investment. Larger, higher-margin materials operations provide recurring cash flows, geographic diversification, and a structural buffer vs. cyclical contracting revenue over 2–6 months.

Improved profitability and cash generation

Material margin expansion and strong operating cash flow demonstrate better project execution and pricing discipline. Consistent cash generation supports capex, integration of acquisitions, dividends/repurchases, and the capacity to deleverage, improving financial durability.

Negative Factors

Rising leverage and balance-sheet strain

Higher leverage reduces financial flexibility and amplifies downside risk if volumes or margins soften. A larger debt load increases interest and refinancing exposure, limits nimbleness for opportunistic bidding, and could constrain capital allocation if execution falters.

Revenue volatility and 2025 decline

A sharp 2025 revenue drop highlights sensitivity to timing, project mix, and market demand. Top-line volatility undermines predictability of cash flow and makes sustaining margin gains harder, increasing the probability that shortfalls in starts or awards affect near-term earnings.

Dependence on M&A and non-recurring cash items

Significant 2025 acquisitions and one-time cash collections supported results, raising questions about organic repeatability. Reliance on M&A for growth and non-recurring cash inflows increases execution and integration risk and may limit sustainable free cash flow if such items do not recur.

Granite Construction Business Overview & Revenue Model

Company Description

Granite Construction Incorporated operates as an infrastructure contractor and a construction materials producer in the United States. It operates through two segments, Construction and Materials segments. The Construction segment engages in the construction and rehabilitation of roads, pavement preservation, bridges, rail lines, airports, marine ports, dams, reservoirs, aqueducts, infrastructure, and site development for use by the public. It also focuses on water-related construction for municipal agencies, commercial water suppliers, industrial facilities, and energy companies. The company also constructs various complex projects, including infrastructure/site development, mining, public safety, tunnel, solar, and power projects. The Materials segment is involved in the production of aggregates and asphalt for internal use, as well as for sale to third parties. In addition, it offers site preparation, mining, and infrastructure services for residential development, energy development, commercial and industrial sites, and other facilities; and provides construction management professional services. The company serves federal agencies, state departments of transportation, local transit authorities, county and city public works departments, school districts and developers, utilities, contractors, landscapers, manufacturers of products requiring aggregate materials, retailers, homeowners, farmers, brokers, and private owners of industrial, commercial, and residential sites. Granite Construction Incorporated was founded in 1922 and is headquartered in Watsonville, California.

How the Company Makes Money

Granite Construction generates revenue primarily through its contracting services, which include civil construction contracts for public and private sector clients. The company earns significant income from various projects such as roadway construction, bridge building, and water resource management. Revenue is also derived from the sale of construction materials, which is bolstered by the company's ownership of quarries and asphalt plants. Key revenue streams include long-term contracts with government agencies, which provide a steady flow of income, and project-specific contracts that can vary in size and duration. Additionally, Granite often engages in partnerships with other firms to bid on larger projects, allowing them to leverage combined resources and expertise. Factors contributing to the company's earnings include its reputation for quality and reliability, strategic bidding practices, and the overall demand for infrastructure development in the regions it serves.

Granite Construction Financial Statement Overview

Summary

Profitability and cash generation have improved materially (stronger margins and solid operating/free cash flow in 2024–2025), but the profile is tempered by higher leverage (debt-to-equity rising to ~1.24) and volatility signals, including a sharp 2025 revenue decline and historically variable free cash flow.

Income Statement

Profitability has improved meaningfully versus earlier years, with net income rising from a loss in 2020 to $193M in 2025, alongside stronger operating and EBITDA margins (2025 EBITDA margin ~9.6% vs. ~4.3% in 2021). Gross margin also expanded steadily into 2025 (~16.1%), indicating better project execution/pricing. The key weakness is growth volatility: after solid revenue growth in 2023–2024, 2025 revenue declined sharply (-22.0%), which raises questions around backlog timing, mix, or end-market softness despite the improved margins.

Balance Sheet

Returns improved materially, with return on equity rising to ~16.4% in 2025 (from low single digits in 2021 and negative in 2020), consistent with the earnings recovery. However, leverage increased notably: debt-to-equity moved up to ~1.24 in 2025 from ~0.82 in 2024 and ~0.75 in 2023, reflecting a sizable step-up in total debt. This higher leverage reduces balance-sheet flexibility and can amplify risk if construction volumes or margins soften.

Cash Flow

Cash generation is solid in the most recent periods: operating cash flow remained strong in 2024–2025 (~$456M–$469M), and free cash flow was robust (~$320M–$331M), translating to about 70% of net income in both 2024 and 2025. That said, free cash flow growth turned sharply negative in 2025 (-45.2%) and the business has shown variability historically (negative free cash flow in 2021–2022), consistent with working-capital swings common in construction. Operating cash flow relative to debt is moderate (2025 ~0.32), suggesting debt reduction capacity exists but is not exceptionally high.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	4.42B	4.01B	3.51B	3.30B	3.50B
Gross Profit	711.22M	572.70M	396.40M	369.49M	362.64M
EBITDA	424.67M	351.71M	170.59M	187.01M	151.92M
Net Income	193.00M	126.35M	43.60M	83.30M	10.10M
Balance Sheet
Total Assets	4.03B	3.03B	2.81B	2.17B	2.49B
Cash, Cash Equivalents and Short-Term Investments	600.24M	726.57M	624.76M	517.17M	585.56M
Total Debt	1.62B	832.85M	735.09M	339.21M	372.85M
Total Liabilities	2.81B	1.95B	1.79B	1.18B	1.50B
Stockholders Equity	1.18B	1.02B	977.30M	953.02M	967.68M
Cash Flow
Free Cash Flow	330.65M	319.94M	43.32M	-65.97M	-72.88M
Operating Cash Flow	468.92M	456.34M	183.71M	55.65M	21.93M
Investing Cash Flow	-993.72M	-228.56M	-359.29M	-11.00M	-21.48M
Financing Cash Flow	475.69M	-67.12M	299.25M	-164.31M	-24.45M

Granite Construction Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 135.47
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GVA, the sentiment is Positive. The current price of 135.47 is above the 20-day moving average (MA) of 129.25, above the 50-day MA of 123.03, and above the 200-day MA of 105.94, indicating a bullish trend. The MACD of 3.96 indicates Negative momentum. The RSI at 66.61 is Neutral, neither overbought nor oversold. The STOCH value of 83.49 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GVA.

Granite Construction Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AGX	79 Outperform	$6.21B	52.75	32.05%	0.49%	13.49%	77.73%
MYRG	77 Outperform	$4.33B	44.27	16.22%	―	-0.64%	168.51%
TPC	77 Outperform	$4.53B	-158.62	-2.31%	0.09%	19.22%	78.83%
PRIM	74 Outperform	$8.21B	30.28	17.79%	0.25%	21.45%	67.31%
ECG	72 Outperform	$5.32B	32.97	38.34%	―	28.20%	24.27%
GVA	70 Outperform	$5.92B	37.49	17.59%	0.45%	6.87%	64.56%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

Granite Construction Corporate Events

Granite Construction Announces Convertible Notes Exchange Agreement

On February 18, 2026, Granite Construction entered into privately negotiated exchange agreements with select holders of its 3.75% Convertible Senior Notes due 2028 to swap $100 million in principal for a mix of cash and, potentially, stock, with final consideration tied to a 15-day volume-weighted average price beginning that day. Based on the February 17, 2026 closing share price of $128.61, the roughly $283 million purchase price, including accrued interest, would be paid entirely in cash, reducing the convertible notes outstanding to about $273.75 million and, after cancellation of the exchanged notes, is expected to remove around 2.2 million shares from the diluted share count, while related partial unwinds of capped call options will return additional cash to the company.

The most recent analyst rating on (GVA) stock is a Hold with a $132.00 price target. To see the full list of analyst forecasts on Granite Construction stock, see the GVA Stock Forecast page.