Centuri's SPO: A Strategic Move to Capture Value in a Growing Infrastructure Market

In a move that underscores its confidence in future growth, Centuri Holdings (NYSE: CTRI) has launched a secondary public offering (SPO) of 9 million shares priced at $19.60 each, with underwriters retaining an option to purchase an additional 1.35 million shares. This strategic capital raise, paired with a $50 million private placement backed by Carl C. Icahn’s investment entities, positions Centuri at the forefront of a booming infrastructure sector. But what does this mean for investors? Let’s dissect the valuation multiples, market demand drivers, and why this SPO could mark a pivotal moment for shareholders.

Valuation: Is Centuri Undervalued?

The SPO price of $19.60 values Centuri at a $1.68 billion market cap, a figure that must be scrutinized against its financial trajectory. While the company reported a net loss of $0.20 per share in Q1 2025, its adjusted EBITDA surged 20% year-over-year to $24.2 million, a critical metric for assessing operational health. With a net debt/EBITDA ratio of 3.5x—down from 3.6x in late 2024—Centuri is deleveraging while scaling its business.

To contextualize the valuation:
- Analyst Price Targets: Ranging from $16.50 to $26.00, with the stock trading near its “fair value” at $19.60.
- Revenue Growth: A 4.2% increase to $550.1 million in Q1, with full-year 2025 guidance of $2.6–2.8 billion.
- Backlog Strength: A $4.5 billion backlog (up 22% YoY) signals strong demand, with a book-to-bill ratio of 2.2x in Q1.

The key question: At $19.60, is Centuri’s valuation justified? Consider that peers in the infrastructure sector often trade at 5–7x forward EBITDA, while Centuri’s current valuation implies a 4.2x multiple based on its 2025 EBITDA guidance. This suggests upside potential if the company meets or exceeds its outlook—and its track record of backlog growth and margin improvements argues it will.

Market Demand: A Tailwind for Centuri

The SPO’s pricing and investor participation reveal compelling signals:
1. Icahn’s Stamp of Approval: The Icahn entities’ $50 million commitment at the SPO price underscores confidence in Centuri’s long-term value.
2. Strong Backlog Momentum: The $1.2 billion in new bookings (including $505M in contracts and $700M in MSA renewals) in Q1 alone bodes well for future revenue visibility.
3. Geographic Expansion: New customer awards totaling $490M in the Pacific Northwest highlight Centuri’s ability to tap into high-growth markets, a strategy that could amplify its revenue base.

The infrastructure sector is primed for growth, fueled by government spending on utilities, renewable energy, and grid modernization. Centuri’s specialization in utility infrastructure services—a niche with limited direct competitors—positions it to capitalize on this trend. With a backlog that’s 1.6x its full-year revenue guidance, the company is well-insulated against near-term volatility.

Strategic Implications: Why This SPO Matters for Shareholders

The SPO isn’t just about raising capital—it’s a strategic move to:
- Accelerate Growth: Funds could fuel acquisitions or greenfield projects in high-margin markets.
- Strengthen Balance Sheet: A lower debt load and improved liquidity (current ratio of 1.57) reduce financial risks.
- Signal Confidence: Management’s decision to proceed with the SPO amid a slight Q1 earnings miss (adjusted loss of $0.12 vs. $0.10 forecast) demonstrates conviction in its long-term story.

Critics might point to the net loss in Q1, but this ignores the non-cash charges and restructuring costs that skewed results. The adjusted metrics—EBITDA growth, margin expansion, and backlog strength—are the true markers of health.

The Case for Immediate Action

Centuri’s SPO offers a unique entry point for investors. At $19.60, the stock is trading at the lower end of analyst targets, yet the company’s fundamentals—backlog growth, margin improvements, and strategic initiatives—suggest it’s primed to outperform. With a low valuation multiple relative to peers and a backlog that could sustain years of growth, Centuri presents a high-reward, low-risk opportunity.

Final Take: The SPO isn’t just a financing event—it’s a catalyst. For investors seeking exposure to a high-growth, undervalued infrastructure leader, Centuri’s stock at $19.60 is a buy. The combination of strong operational metrics, strategic geographic expansion, and institutional backing makes this a must-watch name in the sector. Act now before the market catches up.

Invest wisely—act decisively.