TPC

Tutor Perini($TPC) CEO Shows 'Conviction Buying' Even After 200% Rally... Construction Giant's Complete Transformation with Dividend Launch

11/26/2025 00:41

Tutor Perini Corporation ($TPC) is a US construction company specializing in large-scale civil infrastructure and building projects. With extensive experience in constructing roads, bridges, tunnels, and airports, the company has recently demonstrated strong growth momentum by securing major projects including Honolulu's city rail system, Newark Airport AirTrain replacement, and New York's Midtown Bus Terminal redevelopment. The company is experiencing a transformation that long-term investors should closely monitor. A significant turning point has emerged from insider trading data released in late November 2025. CEO Gary Smalley purchased 5 million shares at $61.51 on November 19, while Director Peter Arkley made substantial purchases totaling 40,000 shares at an average price of $64.21 over November 24-25. This represents meaningful investments totaling $2.56 million, far from token purchases. Why is this buying significant? Because for the past year and a half, insiders including Chairman Ronald Tutor have been consistently selling large volumes. From June 2024 through September 2025, insiders disposed of over $40 million in shares. Founder and Chairman Ronald Tutor, in particular, made multiple large sales as the stock climbed from the $20s to $60s. His average selling prices ranged from $30-60, suggesting opportunistic profit-taking rather than confidence in the company's growth trajectory. Now, with the stock trading above $60 near recent highs, the CEO and a director are making substantial purchases. Such actions would be impossible without access to information and confidence in the company's future prospects that external investors lack. Gary Smalley, who assumed the CEO role in 2024, has the most accurate understanding of the company's current situation and forward plans. Indeed, Tutor Perini's fundamentals are dramatically improving. Q2 2025 results showed adjusted EPS of $1.41, a 315% surge year-over-year, while revenue increased 22% to $1.37 billion. More importantly, the company boasts a record $21.1 billion backlog, representing over four times annual revenue and providing revenue visibility for the next 3-4 years. Management confidence is evident in capital allocation policies. The company announced initiation of quarterly cash dividends of 6 cents starting December 2025. For a construction company to begin paying dividends signals strong conviction in cash flow stability and sustainability. Additionally, a $200 million share repurchase program was approved. For a previously loss-making company to simultaneously pursue dividends and buybacks suggests fundamental business model transformation. Operating cash flow data supports this transformation. Despite reporting net losses, operating cash flow exceeded $900 million. Construction companies typically face upfront costs on large projects, but cash generation improves significantly as projects progress. Current cash holdings of $700 million also provide positive financial stability. Investors should focus on the sustainability of the stock's appreciation. Beginning around $20 in June 2024, shares have risen over 200% to current levels above $60. The rally began in earnest in May 2025, coinciding with Q1 earnings and major project announcements. The question is whether the already substantial gains leave room for further appreciation. From a valuation perspective, the current price represents 12.56 times 2025 expected earnings. This falls within the 10-15x range typical for construction companies and doesn't appear excessively expensive. The price-to-sales ratio of 0.67x, below 1.0, remains attractive considering growth prospects. Analyst price targets around $54.50 suggest limited upside expectations from current levels. However, insider buying suggests potential positive developments beyond analyst expectations. This could include expanded infrastructure spending policies, faster-than-expected profitability improvements, or additional major project awards. Benefits from the Biden administration's Infrastructure Investment and Jobs Act have yet to fully materialize. Risks certainly exist. Construction's endemic problems of project delays and cost overruns persist. The company acknowledged cost overrun issues on some large civil projects. The beta of 2.14 indicates high volatility relative to the market, and rapid recent gains create potential correction pressure. Nevertheless, insider buying at current levels sends a powerful positive signal. The CEO's purchases, in particular, represent more than investment—they demonstrate confident leadership commitment to the company's future. Combined with the $21.1 billion backlog, improving operating cash flow, and dividend initiation, the company appears to have transitioned through turnaround into stable growth trajectory. From an investment perspective, current levels near $60 suggest holding for existing shareholders rather than new purchases. However, post-insider buying price action, year-end dividend payments, and Q3 2025 earnings results merit careful observation. If Q3 delivers strong results, $70+ becomes a reasonable scenario.