Chicago Bridge & Iron Company N.V. (NYSE: CBI) and Granite Construction (NYSE:GVA) are both construction companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, earnings, valuation and risk.
Insider and Institutional Ownership
67.8% of Chicago Bridge & Iron Company N.V. shares are owned by institutional investors. Comparatively, 99.0% of Granite Construction shares are owned by institutional investors. 1.1% of Chicago Bridge & Iron Company N.V. shares are owned by insiders. Comparatively, 1.3% of Granite Construction shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
This table compares Chicago Bridge & Iron Company N.V. and Granite Construction’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Chicago Bridge & Iron Company N.V.||-10.54%||-3.92%||-0.82%|
Chicago Bridge & Iron Company N.V. pays an annual dividend of $0.28 per share and has a dividend yield of 1.9%. Granite Construction pays an annual dividend of $0.52 per share and has a dividend yield of 0.9%. Chicago Bridge & Iron Company N.V. pays out -3.0% of its earnings in the form of a dividend. Granite Construction pays out 48.6% 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. Chicago Bridge & Iron Company N.V. is clearly the better dividend stock, given its higher yield and lower payout ratio.
Volatility and Risk
Chicago Bridge & Iron Company N.V. has a beta of 2.08, suggesting that its share price is 108% more volatile than the S&P 500. Comparatively, Granite Construction has a beta of 1.17, suggesting that its share price is 17% more volatile than the S&P 500.
Valuation & Earnings
This table compares Chicago Bridge & Iron Company N.V. and Granite Construction’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Chicago Bridge & Iron Company N.V.||$9.49 billion||0.16||$9.27 million||($9.43)||-1.60|
|Granite Construction||$2.70 billion||0.84||$126.96 million||$1.07||53.23|
Granite Construction has higher revenue, but lower earnings than Chicago Bridge & Iron Company N.V.. Chicago Bridge & Iron Company N.V. is trading at a lower price-to-earnings ratio than Granite Construction, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings for Chicago Bridge & Iron Company N.V. and Granite Construction, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Chicago Bridge & Iron Company N.V.||2||7||5||0||2.21|
Chicago Bridge & Iron Company N.V. presently has a consensus target price of $20.50, suggesting a potential upside of 36.21%. Granite Construction has a consensus target price of $63.67, suggesting a potential upside of 11.77%. Given Chicago Bridge & Iron Company N.V.’s higher possible upside, equities analysts clearly believe Chicago Bridge & Iron Company N.V. is more favorable than Granite Construction.
Granite Construction beats Chicago Bridge & Iron Company N.V. on 10 of the 15 factors compared between the two stocks.
Chicago Bridge & Iron Company N.V. Company Profile
Chicago Bridge & Iron Company N.V. provides services to customers in energy infrastructure market. The Company provides services, such as conceptual design, technology, engineering, procurement, fabrication, modularization, construction, commissioning, maintenance, program management and environmental services. Its Engineering and Construction segment provides engineering, procurement, and construction (EPC) services. Its Fabrication Services segment provides fabrication and erection of steel plate structures; fabrication of piping systems and process modules, and manufacturing and distribution of pipe and fittings. The Technology segment provides process technology licenses and associated engineering services, and catalysts, for petrochemical and refining industries, and offers process planning and project development services.
Granite Construction Company Profile
Granite Construction Incorporated is a heavy civil contractor and construction materials producer in the United States. The Company operates through three segments: Construction, Large Project Construction and Construction Materials. The Company operates across the nation, serving both public and private sector clients. Within the public sector, it concentrates on heavy-civil infrastructure projects, including the construction of streets, roads, highways, mass transit facilities, airport infrastructure, bridges, trenchless and underground utilities, power-related facilities, water and wastewater facilities, utilities, tunnels, dams and other infrastructure-related projects. Within the private sector, the Company offers site preparation and infrastructure services for residential development, energy development, commercial and industrial sites, and other facilities, as well as provides construction management professional services.
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