Yahoo Finance Tutor Perini Stock Is Estimated To Be Fairly Valued
- By GF Value
The stock of Tutor Perini (NYSE:TPC, 30-year Financials) gives every indication of being fairly valued, according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $18.19 per share and the market cap of $926.1 million, Tutor Perini stock shows every sign of being fairly valued. GF Value for Tutor Perini is shown in the chart below.
Because Tutor Perini is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth, which averaged 3.6% over the past three years and is estimated to grow 0.07% annually over the next three to five years.
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Companies with poor financial strength offer investors a high risk of permanent capital loss. To avoid permanent capital loss, an investor must do their research and review a company's financial strength before deciding to purchase shares. Both the cash-to-debt ratio and interest coverage of a company are a great way to to understand its financial strength. Tutor Perini has a cash-to-debt ratio of 0.37, which which ranks in the middle range of the companies in Construction industry. The overall financial strength of Tutor Perini is 5 out of 10, which indicates that the financial strength of Tutor Perini is fair. This is the debt and cash of Tutor Perini over the past years:
Investing in profitable companies carries less risk, especially in companies that have demonstrated consistent profitability over the long term. Typically, a company with high profit margins offers better performance potential than a company with low profit margins. Tutor Perini has been profitable 8 years over the past 10 years. During the past 12 months, the company had revenues of $5.3 billion and earnings of $2.12 a share. Its operating margin of 4.93% in the middle range of the companies in Construction industry. Overall, GuruFocus ranks Tutor Perini's profitability as fair. This is the revenue and net income of Tutor Perini over the past years:
Growth is probably the most important factor in the valuation of a company. GuruFocus research has found that growth is closely correlated with the long term performance of a company's stock. The faster a company is growing, the more likely it is to be creating value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth rate of Tutor Perini is 3.6%, which ranks in the middle range of the companies in Construction industry. The 3-year average EBITDA growth rate is 8.7%, which ranks in the middle range of the companies in Construction industry.
Another way to look at the profitability of a company is to compare its return on invested capital and the weighted cost of capital. Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. We want to have the return on invested capital higher than the weighted cost of capital. For the past 12 months, Tutor Perini's return on invested capital is 6.97, and its cost of capital is 7.94. The historical ROIC vs WACC comparison of Tutor Perini is shown below:
In conclusion, The stock of Tutor Perini (NYSE:TPC, 30-year Financials) shows every sign of being fairly valued. The company's financial condition is fair and its profitability is fair. Its growth ranks in the middle range of the companies in Construction industry. To learn more about Tutor Perini stock, you can check out its 30-year Financials here. To find out the high quality companies that may deliever above average returns, please check out GuruFocus High Quality Low Capex Screener. This article first appeared on GuruFocus.
