Shares in Balfour Beatty (LSE: BBY) are charging higher today after the company reported its first upbeat set of results in a long time. The company also restarted its dividend payout as its turnaround programme started to bear fruit.

Indeed, Balfour reported a pre-tax loss for the six months to the end of June of £21m, down from the £150m loss reported a year earlier, after Balfour booked writedowns on onerous contracts in its UK construction arm. Revenue dropped to £3.3bn from £3.5bn, but cost reductions helped improve margins and boost profitability. The company reported that its order book at the end of the first half had risen to £12.4bn from £11bn at the end of December and ahead of the £11.3bn recorded at the same period a year earlier.

Based on these results, management decided to announce a 0.9p per share interim dividend, having paid no dividend last year.

These results show that Balfour’s turnaround plan is starting to yield results, but the company still has a long way to go before it can claim to have put the mistakes of the past behind it. What’s more, from an investment perspective, Balfour looks like a poor bet compared to other construction companies such as Carillion (LSE: CLLN) and Costain Group (LSE: COST).

From one disaster to another 

Over the past five years, Balfour has lurched from one disaster to another. 

Since 2011, the company has slumped from a pre-tax profit of £246m to a loss of £304m in 2014 and last year the company reported a full-year loss of £199m. 

Management seems to have got a handle on losses this year, however, and City analysts are now predicting a pre-tax profit of £77m for 2016. Next year, analysts have pencilled-in a pre-tax profit of £119m, which is still around half the level reported for 2011. Over the same period, the company’s annual revenue has dropped from £9.5bn to £7.1bn.

But even if Balfour meets City expectations for growth this year the company’s shares still look expensive. Based on current forecasts the company’s shares are trading at a forward P/E of 20.4.

A better pick for growth 

When it comes to growth Costain easily beats Balfour. This year City analysts expect the company to report a pre-tax profit of £34.5m, up from £24m as reported for 2011. Over the same period, revenue has expanded from £869m to £1.4bn. And despite this growth the company’s shares are cheaper than those of Balfour. 

At current prices Costain trades at a forward P/E of 13.6, falling to 11.7 for next year. The shares currently support a dividend yield of 3.5% and the payout is covered twice by earnings per share.

Income champion 

Carillion’s growth hasn’t been as impressive as that of Costain, but the company’s valuation makes it a much more attractive proposition than Balfour. 

Carillion’s shares currently trade at a forward P/E of 8.3, less than half the valuation of Balfour. Further, the shares support a dividend yield of 6.6% and the payout is covered twice by earnings per share. Unfortunately, City analysts don’t expect much in the way of growth for the company this year but next year analysts are predicting earnings growth of 6%.

Overall, even though Balfour’s shares are rising today, the company might not be the best investment in the construction sector. 

The worst mistake you could make

According to a study conducted by financial research firm DALBAR, the average investor realised an average annual return of only 3.7% a year over the past three decades, underperforming the wider market by around 5.3% annually.

This underperformance can be traced back to several key mistakes that all investors make. To help you realise and understand the most common mis-steps, the Motley Fool has put together this new free report entitled The Worst Mistakes Investors Make.

The report is a collection of Foolish wisdom, which should help you avoid needlessly losing too many more profits. Click here to download your copy today.

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.