North American Construction Group Ltd. NOA has announced that its limited partnership with the Mikisew Group of Companies, Mikisew North American Limited Partnership (“MNALP”), has won a heavy civil construction contract.

Upon the announcement of the win, NOA stock inched up 0.5% during Thursday’s after-hours trading session.

Details on NOA’s New Contract

Located at one of the leading mines in the Fort McMurray region, the heavy civil infrastructure project was awarded by a major producer in the oil sands region. The scope of work for MNALP includes building large diversion ditches to redirect water from upstream catchments away from active mining areas and releasing it into downstream locations.

This two-year project is expected to commence in January 2025 and be completed in October 2026. North American Construction states that this project will help it generate approximately $125 million in revenues.

The company believes this new project builds upon a long-term partnership with the client and allows space to showcase MNALP’s technical expertise in large-scale civil construction.

North American Construction’s Contract Wins Bode Well

North American Construction provides equipment maintenance, mining and heavy construction services to the resource development and industrial construction markets in Canada, the United States and Australia. Its services include constructability reviews, budgetary cost estimates, design-build construction, project management, contract mining and equipment maintenance. In October 2023, NOA acquired MacKellar Group for a total expected consideration of $395 million. This strategic move is likely to boost the company’s prospects.

Opportunities and demand for heavy equipment in Australia are growing. New and expanding operations in Queensland and New South Wales are actively seeking contractor equipment for metallurgical and thermal coal markets. NOA is receiving contract mining and equipment rental opportunities in copper, gold, silver and iron ore.

The contract wins during the third quarter of 2024, combined with the quarterly backlog consumption, resulted in NOA’s pro forma backlog of $3.1 billion, up about $300 million from its second-quarter 2024 ending backlog. The company expects its year-end backlog to remain more than $3 billion and demonstrate increasing geographic and resource diversification.

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Shares of this heavy equipment and mining contractor have jumped 3.3% in the past three months compared with the Zacks Building Products - Heavy Construction industry’s 29.7% growth. Although the company has underperformed the industry, it is likely to benefit from the growing demand for equipment and services in Australia.

NOA’s Zacks Rank & Key Picks

North American Construction currently carries a Zacks Rank #3 (Hold).

Here are some better-ranked stocks from the Construction sector.

Sterling Infrastructure, Inc. STRL presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

It has a trailing four-quarter earnings surprise of 21.5%, on average. Shares of STRL have risen 57.4% in the past six months. The Zacks Consensus Estimate for STRL’s 2024 sales and earnings per share (EPS) implies an increase of 9% and 33.3%, respectively, from the prior-year levels.

Louisiana-Pacific Corporation LPX currently sports a Zacks Rank of 1. LPX delivered a trailing four-quarter earnings surprise of 30.7%, on average. The stock has gained 29.3% in the past six months.

The Zacks Consensus Estimate for LPX’s 2024 sales and EPS indicates an increase of 12.7% and 72.1%, respectively, from a year ago.

MasTec, Inc. MTZ presently sports a Zacks Rank of 1. MTZ delivered a trailing four-quarter earnings surprise of 40.2%, on average. The stock has gained 29.1% in the past six months.

The Zacks Consensus Estimate for MTZ’s 2024 sales and EPS indicates an increase of 1.9% and 84.3%, respectively, from a year ago.

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