Construction and construction materials company Granite Construction (NYSE:GVA) fell short of the markets revenue expectations in Q3 CY2025, but sales rose 12.4% year on year to $1.43 billion. The company’s full-year revenue guidance of $4.4 billion at the midpoint came in 1% below analysts’ estimates. Its non-GAAP profit of $2.70 per share was 7.9% above analysts’ consensus estimates.
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Granite Construction (GVA) Q3 CY2025 Highlights:
- Revenue: $1.43 billion vs analyst estimates of $1.50 billion (12.4% year-on-year growth, 4.5% miss)
- Adjusted EPS: $2.70 vs analyst estimates of $2.50 (7.9% beat)
- Adjusted EBITDA: $215.6 million vs analyst estimates of $197.5 million (15% margin, 9.2% beat)
- The company dropped its revenue guidance for the full year to $4.4 billion at the midpoint from $4.45 billion, a 1.1% decrease
- Operating Margin: 10%, up from 8.2% in the same quarter last year
- Free Cash Flow Margin: 18%, similar to the same quarter last year
- Market Capitalization: $4.50 billion
Company Overview
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.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Granite Construction grew its sales at a tepid 5.9% compounded annual growth rate. This wasn’t a great result compared to the rest of the industrials sector, but there are still things to like about Granite Construction.
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Granite Construction’s annualized revenue growth of 12.2% over the last two years is above its five-year trend, suggesting its demand recently accelerated. 
This quarter, Granite Construction’s revenue grew by 12.4% year on year to $1.43 billion but fell short of Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 14.8% over the next 12 months, an improvement versus the last two years. This projection is healthy and implies its newer products and services will fuel better top-line performance.
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Operating Margin
Granite Construction was profitable over the last five years but held back by its large cost base. Its average operating margin of 3.2% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.
On the plus side, Granite Construction’s operating margin rose by 6 percentage points over the last five years, as its sales growth gave it operating leverage.
This quarter, Granite Construction generated an operating margin profit margin of 10%, up 1.8 percentage points year on year. Since its gross margin expanded more than its operating margin, we can infer that leverage on its cost of sales was the primary driver behind the recently higher efficiency.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Granite Construction’s EPS grew at an astounding 30.9% compounded annual growth rate over the last five years, higher than its 5.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
We can take a deeper look into Granite Construction’s earnings to better understand the drivers of its performance. As we mentioned earlier, Granite Construction’s operating margin expanded by 6 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For Granite Construction, its two-year annual EPS growth of 43% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.
In Q3, Granite Construction reported adjusted EPS of $2.70, up from $2.05 in the same quarter last year. This print beat analysts’ estimates by 7.9%. Over the next 12 months, Wall Street expects Granite Construction’s full-year EPS of $5.87 to grow 2%.
Key Takeaways from Granite Construction’s Q3 Results
We were impressed by how significantly Granite Construction blew past analysts’ EBITDA expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its revenue missed and its full-year revenue guidance fell slightly short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded up 3.6% to $106.40 immediately after reporting.
So should you invest in Granite Construction right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.