Wednesday, 8 May 2024

Why Great Lakes Dredge & Dock Stock Is Up Big Today

by BD Banks

Business is booming for Great Lakes Dredge & Dock (NASDAQ: GLDD), the largest provider of dredging services in the United States, and the company sees significant opportunities on the horizon. Shares traded up 18% as of 11 a.m. ET on Monday after the company announced that it easily topped first-quarter estimates.

“A return to normalcy”

Great Lakes reported earnings of $0.31 per share in the first quarter on revenue of $198.7 million, topping estimates of $0.07 per share on sales of $173 million. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $42.9 million were the company’s best quarter since 2021, which CEO Lasse Petterson said showed “a return to normalcy” after a year marred by weather delays and a dearth of new work.

The company secured four major contract awards in 2023 and had a backlog of future business totaling $879.4 million at quarter’s end. And with the U.S. Army Corps of Engineers managing a $8.7 billion budget in 2024, Great Lakes expects the bid market to remain robust.

Petterson said, “With our substantial backlog, enhanced fleet, and strategic initiatives, we firmly believe that our company is well prepared for the future.”

Is Great Lakes Dredge a buy after its strong earnings report?

The company’s core markets are recovering, but Great Lakes still sees great potential to expand as the U.S. offshore wind industry takes flight. It has commissioned the Acadia, a subsea rock installation vessel (to prepare the seabed for offshore projects), that would be the only U.S. flagged ship of its kind that complies with federal requirements that such a vessel be made in the U.S.

In Great Lakes, investors are buying into a company that has an important role to play in keeping U.S. shipping lanes (and with them, supply chains) running smoothly, with the potential upside tied to the expansion of clean energy. The stock is still down about 40% from where it traded in 2022, so it isn’t too late to climb on board.

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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.