Perini: Handling big construction

When you want to build a house, you look in the phone book for a local contractor. When you want to build a stylish facility, the list of firms that can help you is a short one. There is a 113-year old outfit in Framingham, Massachusetts that invariably occupies a position near the top of the list.

Perini Corporation (NYSE: PCR) is a leading construction services company offering diversified general contracting, construction management and design/build services to private clients and public agencies worldwide. The firm is well known for its casino and hotel projects, but is also active in the design and construction of schools, health care facilities, entertainment facilities and sports complexes. Its civil division builds and maintains highways, subways, and airports. Clients include Harrah's Entertainment (NYSE: HET), Hilton Hotels (NYSE: HLT), Marriott International (NYSE: MAR), Sears Holdings (NASDAQ: SHLD), Honeywell International (NYSE: HON), American Express (NYSE: AXP) and Alcatel-Lucent (NYSE: ALU).

The company surprised the Street earlier in the month, when it reported Q1 EPS of 84 cents and revenues of $987.4 million. Analysts had been expecting 58 cents and $947.2 million. Management also guided FY07 EPS to $2.40-2.60 ($2.17 consensus) and FY07 revenues to $4.0-4.2 billion ($3.98B consensus). The COO cited a near-record backlog of $8.6 billion for the favorable outlook.

Shares popped on the news and subsequently moved into a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Brokers recommend the issue with one "strong buy" and three "holds". Analysts see a 70 percent growth rate this year. The PCR PEG ratio (1.65), Price to Sales ratio (0.39), Price to Free Cash Flow ratio (8.10), Sales Growth rate (61.13%), EPS Growth rate (180.00%), Return on Investment (19.02%) and Return on Equity (24.12%) compare favorably with industry, sector and S&P 500 averages.

Institutional investors hold about 85% of the outstanding shares. Over the past 52 weeks, the stock has traded between $19.80 and $51.97. A stop-loss of $43.65 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.