The Shaw Group (NYSE: SHAW) and Granite Construction (NYSE:GVA) are both industrials companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, institutional ownership, dividends, analyst recommendations, risk and earnings.

Analyst Recommendations

This is a summary of current ratings and target prices for The Shaw Group and Granite Construction, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Shaw Group 0 0 0 0 N/A
Granite Construction 0 2 7 0 2.78

Granite Construction has a consensus target price of $66.43, suggesting a potential upside of 3.20%.

Profitability

This table compares The Shaw Group and Granite Construction’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Shaw Group N/A N/A N/A
Granite Construction 1.84% 5.71% 2.93%

Dividends

Granite Construction pays an annual dividend of $0.52 per share and has a dividend yield of 0.8%. The Shaw Group does not pay a dividend. Granite Construction pays out 40.3% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares The Shaw Group and Granite Construction’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
The Shaw Group N/A N/A N/A $3.25 N/A
Granite Construction $2.51 billion 1.02 $57.12 million $1.29 49.90

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

Institutional and Insider Ownership

98.6% of Granite Construction shares are owned by institutional investors. 1.3% of Granite Construction shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Granite Construction beats The Shaw Group on 8 of the 10 factors compared between the two stocks.

The Shaw Group Company Profile

The Shaw Group Inc. (Shaw) is a provider of technology, engineering, procurement, construction, maintenance, fabrication, manufacturing, consulting, remediation and facilities management services to a diverse client base that includes multinational and national oil companies and industrial corporations, regulated utilities, independent and merchant power producers, and government agencies. The Company has developed and acquired intellectual property, including induction pipe bending technology and environmental decontamination technologies. Its segments include Power, Plant Services, Environmental & Infrastructure (E&I), Fabrication & Manufacturing (F&M), Energy & Chemicals (E&C) Segment, Investment in Westinghouse, and Corporate segment. Effective August 31, 2012, the Company completed the divestiture of its Energy & Chemicals business to Technip. On January 4, 2013, TOSHIBA CORP acquired a 20% stake in Westinghouse from Shaw Group Inc.

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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