Tutor Perini: Use The Post-Earnings Rally To Cash In Your Chips (Rating Downgrade)

Tutor Perini Corporation delivered strong Q3 results last week, with record operating cash flow and a raised FY26 EPS outlook, implying 40% YoY growth. The bulk of contract awards in Q3 were low margin specialty work, while annual backlog growth has now contracted for two consecutive quarters, even as the CECI index slips. TPC's earnings valuation-to-growth tradeoff doesn't look as attractive as before, while record levels of FCF are translating to a below-average FCF yield of less than 13%.