Hook & thesis
Centuri Holdings (CTRI) is not a high-growth story. It is a specialized utility infrastructure services provider that builds and maintains gas and electric distribution networks across the U.S. and Canada. The stock has rebounded from a 52-week low of $14.46 to trade near its 52-week high of $29.02, landing at $28.92 today. That recovery reflects steady underlying demand for distribution modernization and a largely under-the-radar valuation reset: market cap sits around $2.9B while EV/EBITDA is ~16.3 and price-to-sales sits near 0.97.
My trade thesis: the company’s end markets - pipeline replacement, LDC modernization and electric distribution work - should provide steady, contract-backed revenue. The market has over-penalized the name for past execution and governance headlines. With current fundamentals — tiny reported EPS ($0.03), negative free cash flow last reported at about -$46.7M, and a leveraged balance sheet (debt-to-equity ~1.61) — the stock is not without risk. Still, a disciplined long with a defined stop and a 3-6 month horizon captures upside from ongoing infrastructure spending and the technical picture of price above the 50-day and 20-day moving averages.
What Centuri does and why the market should care
Centuri is a specialty contractor focused on the maintenance, replacement, repair and installation work for local gas distribution utilities (LDCs) and electric utilities. It reports four operating segments: U.S. Gas, Canadian Gas, Union Electric and Non-Union Electric. For utility operators the work Centuri does is mission-critical: pipeline replacement, distribution upgrades and expansions tied to regulatory safety programs and broader electrification initiatives. Those programs are multi-year and create an install-and-replace revenue base that can be less cyclical than typical engineering contractors.
Why this matters: regulators and utilities are continuing to modernize distribution systems. That creates a steady backlog pipeline for contractors with established operating footprints. Centuri’s presence across gas and electric markets positions it to capture cross-segment work as utilities upgrade systems. The market should care because those revenue streams are often long-dated and supported by regulated utility customers, which reduces counterparty credit risk relative to other construction segments.
Supporting numbers
- Share price: $28.92; 52-week range: $14.46 - $29.02 (high recorded 02/06/2026).
- Market cap: roughly $2.88B (shares outstanding ~99.6M; float ~84.5M).
- Valuation metrics: P/S ~0.97, EV roughly $3.69B, EV/EBITDA ~16.33, price-to-book roughly 4.2-4.7 depending on source.
- Profitability and cash flow: trailing EPS ~ $0.03, reported negative free cash flow of about -$46.7M, low reported returns (ROA ~0.12%, ROE ~0.43%).
- Balance sheet/quality: debt-to-equity ~1.61; current and quick ratios ~1.67; cash metric shown low relative to liabilities (dataset cash figure small).
- Trading / liquidity: 30-day average volume ~1.09M shares; recent 10-day RSI ~64.6; price trading above the 10/20/50-day SMA/EMA indicating short-term strength but MACD histogram slightly negative (bearish momentum signal).
Valuation framing
The market cap of ~$2.9B with an enterprise value near $3.7B and EV/EBITDA around 16 suggests the market is valuing Centuri closer to a stable services contractor than a pure growth play. P/S near 1x implies investors are paying roughly one dollar of market value for each dollar of revenue; that is not expensive for a steady utility services business if margins and cash flow can normalize. The extremely high P/E (in the triple digits) is a function of very low reported GAAP earnings, so P/E here is not a helpful standalone metric.
Context matters: negative free cash flow and a leveraged balance sheet justify a conservative multiple. But the business model - contract work with utilities - should produce predictable revenue streams when backlog is healthy. If management can restore positive free cash flow and stabilize margins, the market could re-rate the company toward a lower EV/EBITDA multiple expansion or improved EV/Sales outcome. A move to $34 reflects a modest re-rating from current levels and is achievable if project execution steadies and headline risk abates.
Catalysts (2-5)
- New contract awards and backlog disclosures that show multi-year commitments from utilities. These would directly increase revenue visibility.
- Improvement in free cash flow / a clear plan to convert negative FCF to positive FCF over the next few quarters.
- Resolution or clarity around past legal/investor litigation headlines; note that law firms announced investigations on 08/29/2024, 10/03/2024 and 10/11/2024 which weighed on sentiment.
- Incremental electric distribution wins tied to municipal or state-level grid modernization and electrification spending.
Trade plan (actionable)
Trade direction: Long.
Entry: $28.50. This is close to today's open and provides a reasonable execution point while leaving room for intraday volatility.
Stop loss: $25.50. Breach here signals loss of recent support and increases risk of a deeper retracement toward the mid-$20s or lower.
Target: $34.00. This target represents about a 19% upside from the entry and is consistent with a modest re-rating in multiples plus some revenue/margin recovery.
Horizon: long term (180 trading days). Expecting the trade to last up to roughly six months allows time for contract awards, quarterly reporting that may show improved cash flow trends, and potential resolution of lingering headlines. The business's cadence (project wins and multi-quarter backlog realization) and the need for a couple of financial prints to show stabilization justify the 3-6 month window.
Position sizing & risk framing
This is a medium-risk trade. Centuri operates in a defensive sector (utilities) but carries company-specific execution and legal risk. Keep position sizes moderate (for most retail investors, 1-3% of portfolio risk capital) and use the stop to limit downside. If the stop is hit, reassess whether the loss was headline-driven or a structural deterioration in backlog/execution.
Risks & counterarguments
- Legal and governance overhangs: multiple law firms started investigations following weak results and executive turnover (announcements on 08/29/2024, 10/03/2024 and 10/11/2024). These investigations can produce prolonged headline volatility and potential settlements or penalties.
- Execution risk and working capital: Centuri has reported negative free cash flow (-$46.7M) and carries leverage (debt-to-equity ~1.61). Continued FCF weakness could force dilutive financing or slow strategic investments.
- Margin pressure: if input costs, labor or subcontractor availability tighten, margins could compress further which would hurt earnings recovery and the path to positive cash flow.
- Interest rate and macro risk: higher rates increase financing costs for Centuri and its utility customers; some project economics for municipal or utility spending can change if financing becomes more expensive.
- Counterargument - too slow and too leveraged: A legitimate opposing view is that Centuri is a slow-growth operator with low returns (ROA ~0.12%, ROE ~0.43%). If management cannot convert backlog into improving margins and cash flow, the company’s multiples may never re-rate and the stock could revert to a lower trading range closer to the prior low.
What would change my mind
I would reduce conviction or flip to bearish if: (a) the company misses revenue or cash flow targets for another quarter, (b) free cash flow deteriorates further and management signals reliance on dilutive capital, or (c) the legal investigations lead to substantive penalties or restatements. Conversely, I would increase conviction if Centuri posts back-to-back quarters of positive free cash flow, secures multi-year contract awards that materially lift backlog, or provides credible guidance showing margin stabilization.
Conclusion
Centuri is a pragmatic trade: not a fast-growth winner, but a business with durable demand from utility modernization and a valuation that looks tolerable for a services contractor. The current price (around $28.92) offers a defined risk-reward in the near- to mid-term if you buy with a plan: entry at $28.50, stop at $25.50, target $34.00, and a horizon of up to ~180 trading days to allow for operational recovery and headline clearance. Keep position sizes modest and respect the stop — the company’s balance sheet and the lingering legal overhang are real constraints that justify a measured approach.
| Metric | Value |
|---|---|
| Price | $28.92 |
| Market cap | ~$2.9B |
| EV | ~$3.69B |
| EV/EBITDA | ~16.3 |
| P/S | ~0.97 |
| Free cash flow | -$46.7M (trailing) |
Trade idea summary: tactical long at $28.50, stop $25.50, target $34.00, horizon up to 180 trading days. Medium risk; position size accordingly.