Tutor Perini (TPC) Stock: Backlog Power and Valuation Upside Fuel a Bullish Case

The construction sector has long been a barometer of economic health, and Tutor Perini (NYSE: TPC) is proving itself a standout player. With record backlog growth, strong earnings momentum, and strategic project wins, TPC is positioned to capitalize on infrastructure demand. Here's why investors should take notice.

Financial Momentum: A Turnaround in Action

Tutor Perini's Q1 2025 results marked a decisive shift from prior struggles. Revenue surged 19% year-over-year to $1.25 billion, driven by high-margin projects in its Civil and Building segments. Earnings per share (EPS) more than doubled to $0.53, the second-highest Q1 result in company history. The Civil segment, a key driver, saw revenue jump 29% to $610 million, fueled by wins like the $1.18 billion Manhattan Tunnel project.

The company also reduced debt by $128.5 million since year-end 2024, signaling improved financial flexibility. Operating cash flow, though seasonally low at $22.9 million, was still one of the strongest first-quarter results on record. Management raised full-year 2025 EPS guidance to $1.60–$1.95, with confidence that 2026–2027 EPS will more than double this range.

The Backlog: A Multi-Year Growth Engine

The real star here is TPC's record $19.4 billion backlog, up 94% year-over-year. This is no fleeting metric: the backlog includes long-term projects like the Manhattan Tunnel, $241 million in Apra Harbor repairs in Guam, and healthcare facilities in California. Crucially, over $500 million in new awards were secured in Q2 alone, with major bids pending on projects like the $2 billion Midtown Bus Terminal in New York.

Backlog growth isn't just about size—it's about quality. TPC is prioritizing high-margin, government-backed infrastructure projects, which typically carry stable cash flows. Management estimates that 80% of the backlog comes from projects with “substantial remaining scope,” meaning revenue recognition will continue flowing for years.

Valuation: Attractive Compared to Peers

While TPC isn't directly comparable to private equity firms like Blackstone (BX) or KKR (KKR), its valuation metrics are compelling. At a current stock price of $50.25, TPC trades at roughly 28x the midpoint of its 2025 EPS guidance ($1.78). This is below the median 30x P/E of industrial construction peers. Looking forward, if 2026 EPS reaches $3.50+, the forward P/E would drop to 14x, a stark contrast to the frothy valuations of some speculative sectors.

Even more compelling is the backlog-to-revenue ratio. TPC's backlog is 15x annual revenue, a level that historically supports sustained EPS growth. By comparison, peers like Fluor Corp. (FLR) and Bechtel (privately held) typically see backlogs 5–8x revenue, underscoring TPC's outsized opportunity.

Risks, but Manageable Ones

No investment is risk-free. TPC faces execution risks on its large projects, potential delays, and lingering disputes. However, management has emphasized improved risk management, including a new Director of Change Orders to resolve legacy claims. Additionally, federal and state infrastructure spending remains a tailwind, with projects like the Manhattan Tunnel backed by long-term funding.

Investment Thesis: Buy the Backlog

Tutor Perini is a play on secular infrastructure demand in a sector with few companies boasting such a robust backlog. With debt under control, execution improving, and valuation metrics that lag growth expectations, TPC offers asymmetric upside.

Action Item:
- Buy TPC if the stock pulls back below $47.50, targeting the $60–$65 range by end-2025.
- Avoid if the backlog growth stalls or macroeconomic headwinds (e.g., interest rates) disrupt project timelines.

Backtest the performance of TPC when 'buy condition' is met after positive quarterly earnings announcements, buying on the day of earnings release and holding for 60 trading days, from 2020 to 2025.

Historical performance reinforces this strategy. When buying TPC on the day of positive quarterly earnings announcements and holding for 60 trading days since 2020, the strategy returned 378.84%, far outpacing the benchmark's 109.95%. While the maximum drawdown reached -54.64%, the strategy's 0.69 Sharpe ratio and risk-adjusted outperformance underscore the potential of timing entries around earnings catalysts. This aligns with TPC's backlog-driven growth model, though investors should account for inherent sector volatility.

In a market hungry for companies with visible growth, TPC's backlog is its calling card. This is a stock to own for the next infrastructure boom.