Tutor Perini Stock Trading at a Discount: Is It a Buy, Hold or Sell?

Tutor Perini Corporation TPC is currently trading at a discount compared with the Building Products - Heavy Construction industry peers and the broader Construction sector. The company’s forward 12-month price-to-earnings (P/E) ratio is 14, which is below the industry average of 22.95 and the sector’s valuation of 19.71.

The ongoing macro risks surrounding inflation and tariff uncertainties might be pulling this company’s prospects in the short term. But, for the mid and long terms, Tutor Perini might rise above its market peers after scaling from the tailwinds that are keeping it on the go.

This California-based general contracting company is gaining from the favorable demand for infrastructure projects, supported by robust federal and state funding initiatives in the United States, especially with the optimism surrounding the Fed rate cuts. Besides, higher-margin project opportunities, alongside selective bidding strategies, are supporting the long-term revenue visibility and profitability structure of the company.

From the share performance perspective, TPC stock has gained 27.5% in the past three months, outperforming the industry, the broader sector and the S&P 500 index, as evidenced from the chart given below.

What is Driving Tutor Perini’s Momentum?

Robust Infrastructure Spending: The increased public spending scenario in the United States is driving project wins for Tutor Perini across several infrastructure projects, primarily through its Civil and Building segments. During the second quarter of 2025, the company highlighted a few significant new awards and contract adjustments, including the Midtown Bus Terminal Replacement Phase 1 project in New York, valued at $1.87 billion; a healthcare project in California, at $538 million; and two civil works projects in the Midwest, totaling $127 million.

Amid favorable market dynamics, its strategic bidding approach (seeking projects having limited competition, favorable contract terms and higher margins) is what is catalyzing the growth in new project opportunities. As of June 30, 2025, the company’s total backlog grew year over year by 102% to a record high of $21.1 billion.

Market Tailwinds Cushioning Growth: The start of 2025 was rough for the United States, with a new administration in power, to discussions over a newly formulated global tariff regime. However, things started normalizing by the second half of the year, and given the market trends, the rate cut came into existence, with optimism surrounding about two additional cuts in the remainder of 2025. On Sept. 17, 2025, the Federal Reserve slashed the interest rate by 25 basis points, pulling down the benchmark between 4.0% and 4.25%.

With interest rates going down, investment activities are expected to ramp up in the upcoming terms. The trends across enhancing or building new public infrastructure for improving the sustainability structure and ensuring people’s benefits have increased the demand for such projects, aiding companies like Tutor Perini. With lower borrowing rates, this demand is expected to increase further with an already ramped-up market.

Noticeable Operational Initiatives: Strong operating performance and contributions from higher-margin projects in the Civil and Building segments are boosting the confidence of Tutor Perini. It highlights that many new major higher-margin projects across these two segments are currently in the initial stage, which are expected to drive substantial growth, profitability and cash flow in the long term as the project execution activities continue.

Driven by increased project execution activities on certain newer, higher-margin projects amid a favorable market scenario, TPC raised its 2025 GAAP and adjusted earnings per share (EPS) outlook. The company now expects GAAP EPS in the range of $1.70-$2.00 (up from the previous range of $1.60-$1.95), with adjusted EPS expected in the range of $3.65-$3.95 (up from $2.45-$2.80). Additionally, the company is optimistic that its GAAP and adjusted EPS for 2026 and 2027 will exceed the upper end of the revised guidance for 2025.

EPS Estimate Trends of TPC

For 2025, TPC’s earnings estimates have remained stable over the past 60 days at $3.78 per share, but the same for 2026 have moved up in the past 60 days to $4.63. The estimated figures for 2025 and 2026 imply year-over-year growth of a whopping 220.8% and 22.5%, respectively.

The analysts’ sentiments are likely to have been bullish for TPC in the long term, attributable to increased public infrastructure demand and its ability to capture new project opportunities, driving its backlog growth.

What is Hurting TPC’s Growth?

Tutor Perini is exposed to several operational and financial headwinds that could weigh on its future performance despite recent improvements in profitability and backlog growth. Its backlog, while at record levels, includes long-duration civil and infrastructure projects that are susceptible to funding uncertainties, regulatory changes and client-driven scope adjustments.

Broader macroeconomic and geopolitical factors, including tariffs, labor shortages and material cost inflation, have been affecting its project economics. During the first six months of 2025, its general and administrative expenses increased to $188.6 million from $143 million reported in the year-ago period. Moreover, environmental risks such as severe weather, public health crises and climate-related regulations further compound operational uncertainty.

Tutor Perini’s Market Competition

Tutor Perini faces strong competition in the U.S. civil and building infrastructure market from renowned market players like Jacobs Solutions, Inc. J, Fluor Corporation FLR and Granite Construction Incorporated GVA.

Jacobs Solutions is an engineering and consulting firm, offering clients a broad spectrum of design, advisory and construction management services across multiple end markets. Contrarily, Fluor has built its brand as one of the largest engineering, procurement and construction firms globally, with significant exposure to oil and gas, chemicals and energy transition projects. Lastly, Granite Construction focuses heavily on U.S. civil projects, particularly roads, highways and water-related infrastructure, competing directly with Tutor Perini in the domestic market.

While Jacobs Solutions frequently emphasizes its consulting expertise and Fluor focuses on global energy markets, Tutor Perini’s infrastructure-centric approach has allowed it to secure marquee U.S. projects. Against Granite Construction, TPC leverages its greater size and broader portfolio, enabling it to take on larger, more technically demanding projects.

What Should be Your Take on TPC Stock?

Tutor Perini’s discounted valuation positions it as an appealing yet cautious play in the construction space. Strong federal and state funding trends, optimism surrounding Fed rate cuts and its in-house efforts are appealing factors. However, execution risks on long-duration projects, coupled with cost and regulatory uncertainties, warrant caution.

While short-term macroeconomic headwinds, including inflationary pressures, tariff uncertainty and labor cost inflation, may weigh on near-term performance, its long-term fundamentals remain constructive.

Summing up, Tutor Perini’s valuation and backlog strength make it a compelling medium- to long-term story. So, investors may prefer to wait for clearer visibility on margin sustainability and project execution while considering this stock. For now, it is prudent for existing investors to retain this Zacks Rank #3 (Hold) company’s shares, whereas new investors might want to wait for a more favorable entry point.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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