Financial Survey: Granite Construction (NYSE:GVA) and Brookfield Business (NYSE:BBUC)

Brookfield Business (NYSE:BBUC) and Granite Construction (NYSE:GVA) are both mid-cap industrials companies, but which is the better stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, profitability, earnings, valuation, risk and dividends.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Brookfield Business and Granite Construction, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Brookfield Business	1	2	3	0	2.33
Granite Construction	2	1	2	1	2.33

Brookfield Business currently has a consensus target price of $39.20, indicating a potential upside of 53.21%. Granite Construction has a consensus target price of $158.50, indicating a potential upside of 39.14%. Given Brookfield Business’ higher probable upside, research analysts plainly believe Brookfield Business is more favorable than Granite Construction.

Volatility and Risk

Brookfield Business has a beta of 1.25, meaning that its stock price is 25% more volatile than the S&P 500. Comparatively, Granite Construction has a beta of 1.32, meaning that its stock price is 32% more volatile than the S&P 500.

Dividends

Brookfield Business pays an annual dividend of $0.25 per share and has a dividend yield of 1.0%. Granite Construction pays an annual dividend of $0.52 per share and has a dividend yield of 0.5%. Brookfield Business pays out -64.1% of its earnings in the form of a dividend. Granite Construction pays out -12.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Brookfield Business is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

85.0% of Brookfield Business shares are held by institutional investors. 0.9% of Granite Construction shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Brookfield Business and Granite Construction”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Brookfield Business	$27.46 billion	0.19	-$26.00 million	($0.39)	-65.60
Granite Construction	$4.42 billion	1.13	$193.00 million	($4.31)	-26.43

Granite Construction has lower revenue, but higher earnings than Brookfield Business. Brookfield Business is trading at a lower price-to-earnings ratio than Granite Construction, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Brookfield Business and Granite Construction’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Brookfield Business	1.13%	2.05%	0.40%
Granite Construction	-3.32%	27.83%	7.17%

About Brookfield Business

Brookfield Business Corporation focuses on healthcare, construction, and wastewater services in the United States, Europe, Australia, the United Kingdom, Canada, and Brazil. It operates through three segments: Business Services, Infrastructure Services, and Industrials. The company operates 42 hospitals; offers construction services for office, residential, hospitality and leisure, social infrastructure, retail, and mixed-use properties; and provides nuclear technology services, such as fuel, maintenance services, engineering solutions, instrumentation and control systems, and manufactured components for nuclear power plants. It also engages in the collection, treatment, and distribution of water and wastewater to the residential and governmental customers. The company was incorporated in 2021 and is headquartered in New York, New York.

About Granite Construction

Granite Construction Incorporated operates as an infrastructure contractor in the United States. It operates through two segments: Construction and Materials segments. The Construction segment engages in the construction and rehabilitation of roads, pavement preservation, bridges, rail lines, airports, marine ports, dams, reservoirs, aqueducts, infrastructure, and site development for use by the public and water-related construction for municipal agencies, commercial water suppliers, industrial facilities, and energy companies; and construction of various complex projects, including infrastructure/site development, mining, public safety, tunnel, solar storage, and power related projects. The Materials segment is involved in the production of aggregates, asphalt concrete, liquid asphalt, and recycled materials production for internal use in our construction projects and sale to third parties. It also offers site preparation, mining, and infrastructure services for residential development, energy development, commercial and industrial sites, railways, residential development, and energy development; and provides construction management professional services. It serves federal agencies, state departments of transportation, local transit authorities, county and city public works departments, school districts and developers, utilities, contractors, landscapers, manufacturers of products requiring aggregate materials, retailers, homeowners, farmers, brokers, and private owners of industrial, commercial, and residential sites. Granite Construction Incorporated was incorporated in 1922 and is headquartered in Watsonville, California.