Tutor Perini (TPC) Added to FBR Capital's Top Picks List

FBR Capital analyst Alex Rygiel named Tutor Perini Corporation (NYSE: TPC) to its Top Picks list, while reiterating an Outperform rating and price target of $38.00. The firm is also raising estimates for claims' settlement.

Rygiel commented, "Yesterday, December 17, Tutor Perini Corporation (TPC) announced it settled all claims with MGM/CityCenter on December 12. TPC is set to receive net proceeds of $189.5M, including some prior payments, with our expectation of cash inflow of approximately $150M in 1Q15. In November, TPC announced it finally settled the Central Artery Project with the Massachusetts DOT, for which the company recently received $52M. The combined cash infusion ($202M total or approximately $4/share) is expected to be used to pay down debt and for working capital needs. We are raising our EPS estimate for 2015 to incorporate the lower interest expense.

The analyst added, "We are placing TPC on the FBR Top Picks list and reiterating our Outperform rating given the recent weakness in the stock, as (1) we think cash flow from the aforementioned settlements significantly improves the balance sheet; (2) we believe recent backlog growth is only the start of a multiyear improvement; (3) profit margins could improve as greater volumes leverage fixed overhead, contract terms and conditions become more favorable, and pricing power develops; (4) we project revenue growth of 10%–15%, EBITDA growth of 15%–25%, and EPS growth of 25%-plus over the coming years; and (5) we think TPC has an attractive valuation relative to peers, as the shares trade at 5.2x our 2014 EV/EBITDA estimate, below the E&C average of 8.7x and the historical E&C average of 10.0x trailing-12-month EBITDA."

For an analyst ratings summary and ratings history on Tutor Perini Corporation click here. For more ratings news on Tutor Perini Corporation click here.

Shares of Tutor Perini Corporation closed at $21.95 yesterday.

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