$12.54
$60.67
bear $12.54
base $47.65
bull $60.67
margin of safety $24.00
market price* $77.65
What the business is: Tutor Perini is one of the largest US builders of very large, complex public works and buildings. Its Civil segment (49% of the $20.6 billion backlog at December 31, 2025) builds tunnels, subways, bridges, highways and military facilities - current work includes the first phase of California High-Speed Rail, the Purple Line subway segments in Los Angeles, the Honolulu rail guideway and, in New York, the $1.87 billion Midtown Bus Terminal Replacement and the $1.18 billion Manhattan Tunnel project. Its Building segment (36%) builds hospitals, casinos, schools and offices, including several large California healthcare and education projects, and its Specialty Contractors segment (15%) does electrical, mechanical and plumbing work. Black Construction is the largest contractor in Guam. About 91% of 2025 revenue came from the United States, the rest from Guam and other territories and foreign locations. Revenue was $5.5 billion in 2025, up 28%, and the company expects roughly $6 billion of its backlog to turn into revenue in 2026. How we measured earnings: we start from operating cash flow and strip out working-capital swings, deduct stock-based pay, deduct maintenance-level equipment spending, and deduct the share of profits that belongs to the partners in joint ventures the company consolidates. Working-capital swings matter enormously here. For years Tutor Perini booked revenue on disputed claims and unapproved change orders that it had not been paid for; between 2022 and 2024 many of those disputes were settled or lost, producing reported losses while cash came in from collections. On our measure, owner earnings per share were $2.95 (2016), $3.20, $1.31, -$2.54, $4.65, $3.24, -$5.53, -$4.47, -$4.10 and $2.26 (2025). Adding back interest, the cash the business itself produced before paying lenders had a ten-year median of $2.77 per share and a ten-year average of only $1.26 - over a full decade, losses on claims consumed most of what the good years earned. Two judgement calls: (1) 2025 equipment spending of $180.9 million was, per the company, mostly owner-funded equipment for new projects, so we charged only the company's normal 1.14% of revenue ($63 million) as maintenance; (2) 2025 stock pay of $150 million was inflated by a 176.9% rise in the share price on cash-settled awards; we charge it in full in 2025, but the company states most of those awards vest by the end of 2026 and it stopped issuing them in May 2025, which supports lower stock pay ahead. Recent results: 2025 owner earnings were $2.26 per share ($3.21 before interest) even after $150 million of stock pay, $32.5 million of unfavourable legal decisions and $61.8 million of settlements. The first half of 2026 produced owner earnings of about $1.60 per share (roughly $2.10 before interest), with revenue up 15.5% and net income attributable to the company of $91.4 million versus $48.0 million a year earlier. Base case (median): business cash flow of $4.00 per share in year one (above 2025's $3.21, justified by the first-half 2026 run-rate and the scheduled fall in stock pay), $4.25 in years two and three as the contracted backlog is worked off, $4.00, $3.50 and $3.00 in years four to six as today's backlog is used up, then the ten-year median of $2.77 per share indefinitely, with no growth. We treat continuation at the long-run level as supported by the company's record of replacing backlog since it began civil work in 1894; we credit no growth beyond the existing backlog, no margin expansion and no benefit from public funding not yet appropriated. The business is worth about $51.57 per share ($2.75 billion); it owes about $3.92 per share net ($425 million of debt, plus about $55 million for the 11.875% notes costing well above 6% until April 2029, less $271 million of cash the company says is immediately available for corporate use); equity value about $47.65 per share. Bear case (10th percentile): the backlog is delivered but with charges like 2025's ($3.00, $2.50, $2.00 per share), after which earnings settle at about the ten-year average, $1.30 per share, for 17 more years and then end. This is built from evidence in the filings: $324.7 million of claims and $402.1 million of unapproved change orders still sit on the balance sheet, and legal decisions cost $167.7 million in 2024 alone. The bear case also assumes the $400 million of notes due April 2029 must be refinanced at a similar 11.875% rate through 2034. Business worth about $18.17 per share ($971 million), owes about $5.63 per share ($301 million), equity about $12.54 per share. Interest is covered even in this case. Bull case (90th percentile): the company's own levers execute - stock pay normalises to its pre-2025 level and the $78.7 million of temporary negative project adjustments booked in 2025 reverse as the company expects, giving $4.50 then $5.25 per share for five years while the large New York, California and Guam projects ramp, fading to $3.25 per share indefinitely (about the 2016-2021 average and 2025's actual level). Business worth about $64.60 per share, owes $3.92, equity about $60.67 per share. Balance sheet: the Term Loan B was repaid in 2025 and total debt fell to $407.4 million (carrying value) from $534.1 million. Of $734.6 million of year-end cash, only $270.7 million was available for general corporate purposes; the rest sits in joint ventures and is reserved for project use and partner distributions, and $1.84 billion of customer billings in advance of work means much of that cash funds work still to be done, so we did not count it. The revolving credit line of $170 million matures in August 2027. The company began a $0.06 quarterly dividend in late 2025 and authorised $200 million of buybacks, spending $30 million in the first half of 2026. Changes since our previous analysis: our base value falls from $59.31 to $47.65 and our high case from $145.34 to $60.67, while our low case rises from $0 to $12.54. The earlier work assumed decades of growth after year ten and counted cash held inside joint ventures; we now credit growth only where it is contracted in backlog, value the long run at the business's actual ten-year record including its claim losses, and deduct joint-venture partners' share of profits. The low case is higher because debt has been reduced and even the weak ten-year record shows positive earning power after interest. What would make this wrong: further large write-downs on the remaining claims and change orders, cost overruns on fixed-price mega-projects, or a drop in new awards once the current backlog is worked off (the company noted the federal infrastructure law's current funding window closes September 30, 2026, with future funding not yet determined). On the upside, sustained profitable execution on the new, larger projects for several more years would justify a higher long-run level than the ten-year record. A remaining case brought by the Seattle SR 99 tunnel joint venture (45% owned by the company) against the project's designer, claiming more than $300 million, was scheduled for trial in June 2026; we have not counted any recovery beyond what the company already carries. Margin-of-safety price: $24. From $24, reaching our base value within about three and a half years implies roughly 21-22% a year, plus a small dividend; reaching the bull value implies more. Because the range of outcomes is wide and the bear value is about half of $24, we require a deep discount to the base case rather than the usual margin.