Robert W. Baird & Co. Incorporated on Centuri
Thesis
Baird purchased Centuri because it believes the market is underestimating the company's growth potential. Its record backlog suggests earnings growth could come in well above current market expectations. Following its spin-off from Southwest Gas, Baird believes the company remains underfollowed and misunderstood by investors. Management is simultaneously taking steps to improve business quality, including equipment sale-leasebacks that should improve returns, free cash flow, and capital efficiency.
“we believe the market is underestimating the company's growth potential, as its record backlog points to earnings growth well above current expectations”