Builder Props Up Performance, Stock

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For most of the past year, underachievement has been the norm for Sylmar construction firm Tutor Perini Corp.

In each of the previous three quarters, the company fell well short of Wall Street earnings expectations, and Tutor Perini stock suffered. Shares traded above $17 in February, but had fallen to about $10 by the end of last month.

But earnings announced last week for the quarter ended Sept. 30 were higher than analysts had expected. That helped boost company shares 26 percent for the week ended Nov. 7, closing at $12.78, making it one of the top gainers on the LABJ Stock Index. (See page 36.)

Richard Paget, who follows Tutor Perini as an analyst for Imperial Capital LLC in New York, said the week’s gains show investors are feeling more confident about the company.

“Some investors had put them in the penalty box,” he said. “With them beating the street and keeping guidance, that got them back a little bit of credibility.”

Excluding a one-time tax benefit, the company reported earnings of 54 cents a share, 14 percent above analysts’ consensus estimate of 47 cents. That’s a marked improvement from the previous quarter, when the company announced adjusted earnings that were less than half of what investors expected and lowered earnings guidance for the year.

Other factors also played into last week’s increase, most notably Hurricane Sandy. On a Nov. 1 conference call, Ronald Tutor, Tutor Perini’s chief executive, told investors the company should be in line for billions of contracts related to storm damage, particularly the flooded New York subway system. He noted that GreenStar Services Corp., a Tutor Perini subsidiary, is one of the largest electrical contractors in New York.

“There are electrical power issues and wiring issues throughout the transit system as well as virtually everywhere,” Tutor told investors. “There is literally tens of billions of repair work that’s going to be required that we think we should be a major recipient of.”

Paget said it’s common for companies in certain industries to benefit from hurricanes and other natural disasters. But he said investors probably didn’t see how Sandy would boost Tutor Perini.

“There were obvious plays, like building materials. There’s a dredging company I follow that did well,” Paget said. “But after the conference call, some saw Tutor Perini as an under-the-radar hurricane play.”

Tutor visited New York last week to assess whether Hurricane Sandy affected ongoing construction projects there. His office said Thursday that he was returning to Los Angeles and was not available for comment for this article.

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