Centuri Holdings, Inc. (CTRI): what the price requires

At today's price, Centuri Holdings, Inc. (CTRI) is priced for today's economics sustained for ~14.1 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/CTRI

Headline

FieldValue
TickerCTRI
CompanyCenturi Holdings, Inc.
Current price$25.70/sh
CompositionMaster services agreements 78% / Bid contracts 22%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed6.2%
Operating margin today1.8%
Margin expansion implied+4.4pp
Must persist for14.1y
Multiple paid68x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 10.1% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.3 years.

How unusual the bet is: high

ReferenceValue
cohort percentile (of 72 peers)97
sustained it ~10 years at this level14%
implied end-window share0%

Valuation X-Ray

Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset10.16x4expensive
Earnings4.41x2expensive
Relative2.75x5expensive
Growth6.91x2expensive

Families that call it expensive: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.9%); the inversion above states its own rate.

Per-Model Detail (n=13)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$1.9912.91xyesReference only (OCF-based, capex excluded): OCF $0.0B
DCF Exit MultipleGrowth$0.00—noNegative/zero FCF or EBITDA — equity value floored at $0
Relative ValuationRelative$13.731.87xyesP/E 39.23x (blended: static sector reference 20x + trailing (TTM) 84x), scenarios: 31.9x / 39.2x / 46.6x (bear / base = reference held flat / bull), EV/EBITDA 17.16x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$3.307.79xyesBV/sh $8.55, ROE (TTM) 3.6%, ke 9.3%
Two-Stage Excess ReturnAsset$2.0512.54xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$28.350.91xyesRev $3.2B, growth 19% (input: historical growth; tapered), Terminal P/S: 0.7x / 0.8x / 1.0x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair ValueRelative$6.244.12xyesEPS $0.36, growth 17% (input: historical EPS growth), PEG=4.85 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$0.012570.00xyesNormalized EBIT (3y avg op income, one-time charges added back) $0.03B × (1−21%) / WACC 7.9% → EPV (no growth) (excluded from median)
Residual IncomeAsset$1.5416.69xyesBV $8.55 + 5yr PV of (ROE (TTM) 3.6% − Kₑ 9.3%) × BV; BV grows 2.3%/yr
Graham NumberAsset$8.323.09xyes√(22.5 × EPS $0.36 × BVPS $8.55) — Graham's conservative floor
EV/EBITDA RelativeRelative$8.053.19xyesEBITDA $0.13B × sector EV/EBITDA 13.0x
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$11.622.21xyesEPS $0.36 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$78.280.33xyesRevenue $3.16B × sector P/S 2.5x
PEG Fair ValueRelative$9.352.75xyesEPS $0.36 × (PEG 1.5 × growth 17.3% (input: historical EPS growth)) → PE 26.0x
Earnings YieldEarnings$3.896.61xyesEPS $0.36 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$682.8m
Net debt / NOPAT (after-tax)16.94x
Net debt / operating income (pre-tax)13.38x
Burning cashno

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

The strangest number in the data: at $29.76 the price embeds a re-rating measured in roughly 15 years of sustained growth, because trailing earnings are tiny against a 3.2% operating margin. On current profits no valuation family comes close to the price.

This is a utility-infrastructure contractor, building and maintaining gas and electric networks, where about 78% of revenue runs through recurring master services agreements. The bet is entirely on margins expanding from today's thin level toward management's stated mid-single-digit-plus target.

Q1 2026 backed the growth story but not yet the profits: revenue up 31% to $723 million, record backlog of $6.5 billion, and gross profit up 76%, but still a net loss of about $9.5 million. Net debt of roughly $683 million runs near 6.8x operating income.

Bull Case

The counterintuitive finding is that a business posting net losses and a 3.2% operating margin is being priced as a high-growth compounder, and the demand data explains why the market is willing to do it. Centuri builds and maintains the gas and electric distribution networks that utilities depend on, and roughly 78% of its revenue comes through recurring master services agreements rather than one-off bids. That is a sticky, repeat-revenue base attached to mandatory utility spending on aging infrastructure and grid modernization. The Q1 2026 evidence was striking: revenue grew 31% to $723.2 million, gross profit climbed 76%, and backlog reached a record $6.5 billion, with more than $345 million in new commercial awards announced in April alone and year-to-date awards near $1.4 billion. The order book is the asset, and it is growing faster than the top line.

The profitability inflection is the whole thesis. Centuri is a low-margin services company today, but management has laid out 2025 to 2029 targets of a 10% to 15% base revenue CAGR and a 30% to 45% adjusted EPS CAGR, with a 2029 base gross margin target of 8.7% to 9.7%, well above where it operates now. The mechanism is operating leverage: as the recently-IPO'd company sheds the cost structure of its former parent and scales its master-agreement work, more of each revenue dollar should convert to profit. Q1 already showed gross profit growing more than twice as fast as revenue, the first sign that mix and execution are improving.

The ownership story adds a clean setup. Southwest Gas Holdings completed its full separation from Centuri, so the company now stands alone with no overhang from a parent that wanted out, and the float is fully independent. The backlog provides revenue visibility that most contractors lack, and the end demand, utility infrastructure investment, is among the most durable spending categories in the economy. Analysts are constructive, with Baird at Outperform and a $41 target and Wells Fargo at Buy with $37, both well above the current price. The bull case is that Centuri executes its margin plan against a record backlog, and the thin trailing earnings that make the stock look expensive today give way to the double-digit margins the price is already paying for.

Bear Case

The structural truth a holder has to face is plain: the multiples are pricing what has not happened yet. Centuri runs a 3.2% operating margin and is still posting net losses, and on those trailing numbers no valuation family reaches the price. The entire equity value rests on a margin-expansion plan that management has described but not yet delivered. If the margin target slips, even modestly, the gap between price and demonstrated earnings is enormous.

The execution risk in this business is real and specific. Centuri's own filing warns that projects in backlog can be subject to delays or cancellation from regulatory requirements, adverse weather, and customer changes, so the record $6.5 billion order book is a softer number than it looks (FY2025 10-K, accession 0001981599-26-000020). It also flags cost or schedule overruns on fixed- or unit-price contracts and MSAs, the exact mechanism by which a thin-margin contractor turns a profitable job into a loss (FY2025 10-K, accession 0001981599-26-000020). On a low base margin, a single large overrun can erase a quarter's profit. The business is also seasonal, with revenue lowest in the first fiscal quarter due to winter weather (FY2025 10-K, accession 0001981599-26-000020), and carries customer-concentration credit risk in its receivables and contract assets (FY2025 10-K, accession 0001981599-26-000020).

The balance sheet leaves little room for any of that to go wrong. Net debt of about $683 million sits near 6.8x trailing operating income, high leverage for a low-margin contractor that is still unprofitable. A company that needs years of margin expansion to justify its price, while carrying nearly 7x leverage and facing weather, overrun, and concentration risk, is a demanding bet. The recent IPO also means a limited public track record. The bear case is not that the business is bad; it is that the price has already paid for a flawless multi-year execution that the company has yet to prove it can deliver, with a levered balance sheet and a thin margin as the cushion.

Valuation

Invert the price and the demand becomes clear. At $29.76 the market pays about 76x company-wide operating income, an extreme multiple that exists because trailing operating income is tiny against a 3.2% margin. The solve runs in duration mode and requires growth sustained for roughly 15 years to justify the price, computed at a 10.4% cost of capital with 4% terminal growth, and the implied margin the price needs is about 6.5%, roughly double today's level. That combination, a long duration plus a margin that has to nearly double, is why the priced-in assumption reads as elevated: it is above what the current fundamentals comfortably support.

The valuation X-ray is emphatic because the company is barely profitable: no family reaches the price. Those numbers are not a price target; they are the model's way of showing that on demonstrated earnings the stock is worth a fraction of where it trades. The entire gap between those figures and the $29.76 price is the market capitalizing future margin expansion that has not yet appeared in the financials.

The synthesis is that Centuri cannot be valued on current earnings at all; it can only be valued on belief in the margin plan. If management hits its 2029 targets of double-digit revenue growth and a near-doubling of base gross margin, the forward earnings would eventually grow into something resembling the price, and analyst targets of $37 to $41 reflect that forward view. If the margin plan stalls, the static methods near book value are the honest read and the downside is severe. This is a forward-execution stock priced on a multi-year inflection, not a value name, and the record $6.5 billion backlog is the single best argument that the inflection is real rather than hoped-for.

Catalysts

The defining recent event was Q1 2026 results reported June 1, 2026: revenue up 31% to $723.2 million, gross profit up 76%, adjusted EBITDA up 34%, and a record backlog of $6.5 billion, though the company still posted a net loss of about $9.5 million, narrowed from $17.9 million a year earlier. The stock fell about 12% on the print despite the strong top line and backlog, a sign the market wanted to see profit, not just growth. The key forward signal is margin: management reaffirmed 2026 guidance of $3.24 to $3.54 billion in revenue, $280 to $310 million of adjusted EBITDA, and $55 to $75 million of adjusted net income, and introduced 2025 to 2029 targets of a 10% to 15% base revenue CAGR and a 30% to 45% adjusted EPS CAGR. Whether margins actually expand toward the 8.7% to 9.7% 2029 gross-margin target is the catalyst that matters.

Bookings are the other live driver. Centuri announced more than $345 million in new commercial awards in April 2026 across natural gas and electric infrastructure, bringing year-to-date awards near $1.4 billion, so each new award is a visible step toward the backlog and revenue targets. The clean structural backdrop is that Southwest Gas Holdings completed its full separation from Centuri, leaving the company independent with no parent overhang. Analyst sentiment is constructive, with Baird raising its target to $41 at Outperform and Wells Fargo maintaining Buy at $37, both above the current price, though targets across sources vary widely. The next earnings report and any update on margin progression and award flow are the events most likely to move the thesis.

Sources: Centuri Q1 2026 results, record backlog (StockTitan), Why CTRI fell after Q1 (Simply Wall St), Centuri 2025-2029 targets (Seeking Alpha), Wells Fargo keeps Buy on CTRI (Globe and Mail).

Peer Cohorts (Per Segment, With Filing Citations)

U.S. Gas Utility Services / Union Electric Utility Services (reported)

Canadian Utility Services / Non-Union Electric Utility Services (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive CTRI report on boothcheck