Shares of Sterling Construction (NYSE:STRL) surged nearly 15% Wednesday morning amid a stronger-than-expected fourth-quarter profit, lifted by much higher revenues and improved performance in its Utah division.
The Houston-based company posted net income of $9.3 million, or 54 cents a share, compared with $800,000, or 3 cents a share, in the same quarter last year.
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Revenue for the heavy civil construction company was $138 million, up 92.5% from $71.7 million a year ago, beating the Street’s view of $96.63 million.
Sterling Construction CFO James Allen said the company closed the year with a strong fourth quarter, helped by improved weather in Texas.
Strong performance was led by its recently added Utah operations, partially offset by lower revenues in its Texas and Nevada operations due primarily to increased competition and lower bid prices.
Despite the solid results however, Sterling’s chief executive, Joseph Harper, said the company does not see market conditions improving any time soon.
"Continued deferral of new federal funding legislation or reductions in federal funding could negatively impact the states’ highway and bridge construction expenditures for fiscal years 2011 and beyond," he said, noting the company is unable to predict when or on what terms the federal government might enact legislation to give the states more visibility in funding projects.
Sterling is also affected by the nationwide decline in home sales and the increase in foreclosures.