GVA

Granite Construction ($GVA): Director's Bullish Buy Follows Months of Executive Selling—Is This Infrastructure Stock Undervalued?

05/12/2025 20:35

A notable insider transaction has caught the attention of investors watching Granite Construction Inc. ($GVA). On May 12, 2025, board member Alan Krusi purchased 1,250 shares at $82.63 per share, totaling approximately $103,288. This purchase stands out as the lone buying signal amid a consistent stream of selling by executives over recent months. Krusi's purchase contrasts sharply with the selling pattern established by company leadership between August 2024 and April 2025. Most notably, President Kyle Larkin sold a total of 59,807 shares over the past six months, including a significant transaction of 30,000 shares at $89.28 on November 5, 2024. Larkin continued selling approximately 30,000 additional shares through late April 2025, with most transactions executed automatically under predetermined Rule 10b5-1 trading plans. Granite Construction's stock has experienced considerable volatility over the past eight months. After reaching highs near $99 in November 2024, the share price declined to the $70 range by March 2025 before stabilizing around its current level of $82. Interestingly, Krusi's purchase comes after the stock has settled following a roughly 17% decline from its peak. Granite Construction, with a market capitalization of approximately $3.4 billion, is a mid-sized construction company that specializes in infrastructure projects such as roads, bridges, and tunnels across the United States. The company operates through two segments: Construction and Materials, with transportation projects for federal, state, and local governments serving as its primary revenue source. Financially, Granite reported $699.55 million in revenue for Q1 2025 on May 1, representing a 4.1% year-over-year increase but slightly missing analyst expectations of $706.15 million. Adjusted earnings per share came in at 1 cent, an improvement from the 21-cent loss recorded in the same quarter of the previous year. The company announced on April 17 that it had secured an $80 million contract from the Texas Department of Transportation, a development expected to positively impact its backlog and future profitability. Industry experts maintain a cautious outlook on Granite's current position. While the infrastructure construction sector faces cost pressures from recent interest rate hikes and rising material prices, the U.S. government's continued infrastructure investment initiatives provide a potential long-term growth catalyst. Krusi's decision to purchase shares is particularly noteworthy given his extensive background in the construction and engineering industries. He previously served as President and CEO of the Industrial Services division at AECOM Technology Corporation and holds board positions with several companies, giving him deep insight into the industry landscape. Meanwhile, the broader U.S. market is grappling with uncertainties related to President Trump's tariff policies and concerns about rising commodity prices. As of May 9, 2025, the S&P 500 index has declined 3.7% year-to-date, with investors trending toward moving capital from defensive sectors to more economically sensitive areas. While infrastructure construction companies like Granite are classified as cyclical stocks, their heavy reliance on government projects can provide relative stability during uncertain economic periods. The sector's long-term growth prospects remain viable as long as U.S. government infrastructure investment plans continue. Analyzing the recent insider trading patterns reveals that Granite Construction executives sold substantial quantities of shares when the stock price exceeded $90, while buying interest has emerged in the low $80 range. This suggests the current price level may represent an attractive entry point, at least in the short term. Insider trading experts note that unlike the predetermined sales executed under Rule 10b5-1 plans, Krusi's purchase represents a deliberate decision made at the current time, potentially reflecting confidence in the company's long-term value and growth potential. Analyst consensus on Granite Construction remains predominantly neutral with a 'Hold' rating and a 12-month price target of $106.50, indicating approximately 29% upside from current levels. Investors should monitor the upcoming Q2 earnings report (expected in late July or early August) and announcements of new contract wins for further guidance.

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