Q2 Earnings Review: Construction and Maintenance Services Stocks Led by Great Lakes Dredge & Dock (NASDAQ:GLDD)

Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at Great Lakes Dredge & Dock (NASDAQ:GLDD) and its peers.

Construction and maintenance services companies not only boast technical know-how in specialized areas but also may hold special licenses and permits. Those who work in more regulated areas can enjoy more predictable revenue streams - for example, fire escapes need to be inspected every five years–. More recently, services to address energy efficiency and labor availability are also creating incremental demand. But like the broader industrials sector, construction and maintenance services companies are at the whim of economic cycles as external factors like interest rates can greatly impact the new construction that drives incremental demand for these companies’ offerings.

The 13 construction and maintenance services stocks we track reported a satisfactory Q2. As a group, revenues missed analysts’ consensus estimates by 1% while next quarter’s revenue guidance was 2% below.

Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.

Luckily, construction and maintenance services stocks have performed well with share prices up 12.1% on average since the latest earnings results.

Best Q2: Great Lakes Dredge & Dock (NASDAQ:GLDD)

Founded as Lydon & Drews dredging company, Great Lakes Dredge & Dock (NASDAQ:GLDD) provides dredging services, land reclamation, and coastal protection projects in the United States and internationally.

Great Lakes Dredge & Dock reported revenues of $170.1 million, up 28.2% year on year. This print exceeded analysts’ expectations by 3.5%. Overall, it was an incredible quarter for the company with an impressive beat of analysts’ earnings estimates.

Lasse Petterson, President and Chief Executive Officer, commented, “Despite having three dredges in drydock, Great Lakes achieved solid results in the second quarter driven by strong project performance from our active dredges."

Interestingly, the stock is up 45.1% since reporting and currently trades at $11.75.

Is now the time to buy Great Lakes Dredge & Dock? Access our full analysis of the earnings results here, it’s free.

Granite Construction (NYSE:GVA)

Having played a role in the construction of the Hoover Dam, Granite Construction (NYSE:GVA) is a provider of infrastructure solutions for roads, bridges, and other projects.

Granite Construction reported revenues of $1.08 billion, up 20.5% year on year, outperforming analysts’ expectations by 7.3%. The business had an incredible quarter with an impressive beat of analysts’ operating margin estimates and full-year revenue guidance exceeding analysts’ expectations.

Granite Construction delivered the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 19.6% since reporting. It currently trades at $81.78.

Is now the time to buy Granite Construction? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: Orion (NYSE:ORN)

Established in 1994, Orion (NYSE:ORN) provides construction services for marine infrastructure and industrial projects.

Orion reported revenues of $192.2 million, up 5.3% year on year, falling short of analysts’ expectations by 3.4%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.

As expected, the stock is down 50.3% since the results and currently trades at $5.49.

Read our full analysis of Orion’s results here.

WillScot Mobile Mini (NASDAQ:WSC)

Originally focusing on mobile offices for construction sites, WillScot (NASDAQ:WSC) provides ready-to-use temporary spaces, largely for longer-term lease.

WillScot Mobile Mini reported revenues of $604.6 million, up 3.9% year on year. This result lagged analysts' expectations by 1.7%. It was a slower quarter as it also produced a miss of analysts’ earnings estimates. In addition, it lowered its full-year revenue guidance and its full-year EBITDA forecast also fell short of Wall Street's estimates.

The stock is down 9.2% since reporting and currently trades at $36.15.

Read our full, actionable report on WillScot Mobile Mini here, it’s free.

MYR Group (NASDAQ:MYRG)

Constructing electrical and phone lines in the American Midwest dating back to the 1890s, MYR Group (NASDAQ:MYRG) is a specialty contractor in the electrical construction industry.

MYR Group reported revenues of $828.9 million, down 6.7% year on year. This print missed analysts’ expectations by 5.4%. It was a slower quarter as it also logged a miss of analysts’ operating margin and earnings estimates.

The stock is down 15.6% since reporting and currently trades at $117.98.

Read our full, actionable report on MYR Group here, it’s free.

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