Perini Continues Its Strong Growth, Looks Inexpensive

Nov. 9.07 | About: Perini Corp. (PCR)

After the bell, Perini (PCR) reported a very strong quarter easily surpassing analyst expectations and showing that the fear in the marketplace of slowing in the commercial construction business has not affected the company (as growth rates continue to accelerate).

Perini's focus is primarily in the gambling sector where the company is building the very large CityCenter casino and entertainment center in Las Vegas along with several other casinos such as the Trump Casino, Cosmopolitan Casinos and Foxwoods expansion in CT. The company also does significant work on health care facilities, highway projects, office buildings and for Universities.

The company raised guidance for 2007's revenues from $4.1-$4.3B to $4.4-4.6B and in 2008 initiated a revenue estimate of $5-5.4B along with bottom line figures to $3.30-3.45 in 07 and $3.50-3.75 in 08 which surpassed both my expectations along with "street expectations". One close item to watch is that the backlog did decline in this most recent quarter to $7.8B (down 7% from the end of 06) but the company was awarded a couple of additional significant contracts after the close of the quarter and this figure does tend to be lumpy.

With the stock now trading at $55 per share with earnings guidance of $3.30-3.45 for this year (and a (in my opinion very) conservative estimate of 10% growth next year) along with $12 per share in cash I find this stock to be inexpensive.

The company could be susceptible to slowdowns especially in the gambling markets in the northeast, Vegas and California but one thing that comforts me is that many of these casinos are always trying to outdo each other in terms of features. The company also has potential future business prospects with CityCenter East and MGM's major Atlantic City project.

Disclosure: Long PCR