A 'Tip of the Hat' to Dave in Hackensack for alerting me to the fact the Perini shares had fallen well off last year's highs of around $75/share.
Perini Corp. [NYSE:PCR] Feb. 21, 2008 price [1:45 PM] $37.80
52-week range: $25.08 - $75.43
Perini Corp. provides general contractor services, construction management and design-build services to public agencies as well as private clients worldwide. On the civil side they are involved in public works such as infrastructure repair and replacement in areas including bridges, mass transit systems, highways etc. The US military is a large customer and Perini has contracts with them in Iraq and elsewhere for major projects around the world.
Perini shares were extremely well-loved last year [way too popular!] when many investors were focused on our nation's crumbling infrastructure after the huge bridge failure was on every newscast. When PCR shares hit their highs they were over 30x trailing earnings [although with very good prospects for growth].
The company has continued to prosper with year-end 2007 earnings due to be released on Feb. 26th. The consensus view is for 4Q and 2007 yearly EPS of $0.73 and $3.44 - both all-time highs for those periods.
At the current price of $37.80 that makes their trailing P/E just under 11x. The forward projection for 2008 is now at $3.55 taking into account the slowing US economy. As Dave-in-Hackensack noted, Perini's order backlog is now more than double full year 2007's total sales ensuring a full schedule of work in the predictable future. Perini noted that 92% of its backlog are "cost plus/guaranteed maximum" contracts making earnings visability very good.
Two recent acquisitions have expanded Perini's end markets. One firm was headquartered in Florida and the other in California giving good prospects for additional work on both coasts. PCR's projects are broad based in scope:
Hotels and Casino
Condos
Sports Stadiums
Schools
Corporate Campuses
Highways & Bridges
Mass Transit
Wastewater Facilities
Site Work & Excavation
Healthcare Facilities
Perini is certified in LEED [Leadership in Energy & Environmental Design] Green Building projects with 125 LEED accredited professionals in house. McGraw Hill forecasts 5% - 10% of building starts will be "green" by 2010. This is a growth area that not every company can compete in.
The company exceeded its own previously issued forecasts for 2007 [of $2.80 - $3.00/share]. The balance sheet is very underlevered with LT debt of only 4% as of September 2007. Treasury cash was over $370 MM at that time.
With huge backlogs of work already on the books and new contracts still being added the company figures to have good revenues and profits for years to come. At < 10.7x forward projections the shares are not 'priced for perfection' as they were last summer at twice today's quote.
Guru David Dreman added to his position in Perini in the fourth quarter of 2007.
Large Holders [as of September 2007] were:
AXA - 5.28%
Goldman Sachs - 4.23%
Barclays Global - 5.13%
State Street Corp. - 3.96%
Vanguard Group - 3.12%
American Century Funds - 3.09%
Deutsche Bank - 2.34%
A reasonable target for these shares might be 15x 2008's estimate of $3.55 or $53.25/share - up over 40% from this morning's price.
*******************************************************************
An interesting lower-risk way to play PCR is to write [sell] October 2007 $30 puts for $3.40 /share. You'll either keep the premium [if PCR shares stay above $30 through October 17th] or, worst case, you will be forced to buy shares at $30 less $3.40 or $26.60 /share net cost.
Perini Corp. [NYSE:PCR] Feb. 21, 2008 price [1:45 PM] $37.80
52-week range: $25.08 - $75.43
Perini Corp. provides general contractor services, construction management and design-build services to public agencies as well as private clients worldwide. On the civil side they are involved in public works such as infrastructure repair and replacement in areas including bridges, mass transit systems, highways etc. The US military is a large customer and Perini has contracts with them in Iraq and elsewhere for major projects around the world.
Perini shares were extremely well-loved last year [way too popular!] when many investors were focused on our nation's crumbling infrastructure after the huge bridge failure was on every newscast. When PCR shares hit their highs they were over 30x trailing earnings [although with very good prospects for growth].
The company has continued to prosper with year-end 2007 earnings due to be released on Feb. 26th. The consensus view is for 4Q and 2007 yearly EPS of $0.73 and $3.44 - both all-time highs for those periods.
At the current price of $37.80 that makes their trailing P/E just under 11x. The forward projection for 2008 is now at $3.55 taking into account the slowing US economy. As Dave-in-Hackensack noted, Perini's order backlog is now more than double full year 2007's total sales ensuring a full schedule of work in the predictable future. Perini noted that 92% of its backlog are "cost plus/guaranteed maximum" contracts making earnings visability very good.
Two recent acquisitions have expanded Perini's end markets. One firm was headquartered in Florida and the other in California giving good prospects for additional work on both coasts. PCR's projects are broad based in scope:
Hotels and Casino
Condos
Sports Stadiums
Schools
Corporate Campuses
Highways & Bridges
Mass Transit
Wastewater Facilities
Site Work & Excavation
Healthcare Facilities
Perini is certified in LEED [Leadership in Energy & Environmental Design] Green Building projects with 125 LEED accredited professionals in house. McGraw Hill forecasts 5% - 10% of building starts will be "green" by 2010. This is a growth area that not every company can compete in.
The company exceeded its own previously issued forecasts for 2007 [of $2.80 - $3.00/share]. The balance sheet is very underlevered with LT debt of only 4% as of September 2007. Treasury cash was over $370 MM at that time.
With huge backlogs of work already on the books and new contracts still being added the company figures to have good revenues and profits for years to come. At < 10.7x forward projections the shares are not 'priced for perfection' as they were last summer at twice today's quote.
Guru David Dreman added to his position in Perini in the fourth quarter of 2007.
Large Holders [as of September 2007] were:
AXA - 5.28%
Goldman Sachs - 4.23%
Barclays Global - 5.13%
State Street Corp. - 3.96%
Vanguard Group - 3.12%
American Century Funds - 3.09%
Deutsche Bank - 2.34%
A reasonable target for these shares might be 15x 2008's estimate of $3.55 or $53.25/share - up over 40% from this morning's price.
*******************************************************************
An interesting lower-risk way to play PCR is to write [sell] October 2007 $30 puts for $3.40 /share. You'll either keep the premium [if PCR shares stay above $30 through October 17th] or, worst case, you will be forced to buy shares at $30 less $3.40 or $26.60 /share net cost.
