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Here's Why Quanta Services' Bull Run Continues into 2017
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Without doubt, engineering, procurement and construction services provider, Quanta Services, Inc. (PWR - Free Report) has emerged as one of the biggest winners of 2016, rallying a whopping 85.1% over the past one year. The gain is almost double of the Zacks classified Engineering/R&D Services industry average of 42.2%.
Despite having a choppy earnings surprise history in recent times, the company has been attracting bullish analyst attention, prior to its fourth-quarter 2016 results, on the back of upward estimate revisions over the past couple of months. This is likely to reassure investors of the company’s prospects.
The Zacks Consensus Estimate for fiscal 2016 earnings inched up from $1.37 to $1.38 over the same time frame, driven by upward estimate revision versus none lower. We believe that the stock’s Bull Run will continue into 2017 and beyond as it has plenty more room to run. Here’s discussing a few highlights.
Riding on Positive Industry Trends
Positive industry trends, including aging grid, shifting generation mix and implementation of clean energy initiatives, are resulting in impressive demand for Quanta Services’ offerings, thus stoking growth. Moreover, the company is currently pursuing several high-voltage electric transmission award opportunities, amid substantial bidding activity, in Australia, Canada and the U.S.
In addition, Quanta Services has a solid base of large transmission projects in its backlog, which should benefit its results in 2017. Also, a gradual shift from coal to gas for power generation, among commercial and residential customers, is expected to boost natural gas pipeline projects over the long run. Thus, rising natural gas demand and strict new pipeline safety regulations are anticipated to drive multi-year opportunities in the natural gas distribution market, which will multiply the prospects for Quanta Services.
Financials Show Promise
The Price to Sales ratio is an important measure of a stock’s valuation, showing how much an investor is paying for each dollar of revenue generated. Quanta Services has a P/S ratio of 0.62, implying that investors are paying investors 62 cents in stock price, for each dollar of revenue generated by the company.
This is lower than the industry average of 0.70, signaling that Quanta Services is undervalued compared to peers. In addition, the company has an impressive projected EPS growth of 37.6% for full-year 2016, miles ahead of the 9.5% mark of the industry.
Overall, this Zacks Rank #2 (Buy) company has a VGM Score of ‘B’. Our VGM Score identifies stocks that have the most attractive value, growth, and momentum characteristics. In fact, our research shows that stocks with VGM Scores of ‘A’ or ‘B’ when combined with a Zacks Rank #1 (Strong Buy) or 2 make solid investment choices.
2017 Looks Brighter
With Donald Trump at the helm of the government and his trillion-dollar infrastructure rebuilding program on the cards, Quanta Services has more reasons to celebrate, entering into 2017. The company is engaged in the building and repairing of electric power, energy and telecommunications infrastructure. Hence, Mr. Trump’s ambitious plans to fortify America’s power grid bode well for the company’s growth.
We believe that the North American electric transmission and distribution markets are likely to act as one of the key growth drivers for the company, as this region continues to deploy more capital in transmission and distribution upgrades. Over the long run, the company envisions government regulations like the EPA's Clean Power Plan and Federal Energy Regulatory Commission (“FERC”) Order 1000, to generate significant incremental electric transmission investment.
Middleby Corporation beat earnings in each of the trailing four quarters, resulting in an average surprise of 15.9%.
KBR has an average positive earnings surprise of 3.8%, over the trailing four quarters, beating estimates twice.
With four repeated earnings beats over the trailing four quarters. A. O. Smith has an average positive surprise of 5.9%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
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Here's Why Quanta Services' Bull Run Continues into 2017
Without doubt, engineering, procurement and construction services provider, Quanta Services, Inc. (PWR - Free Report) has emerged as one of the biggest winners of 2016, rallying a whopping 85.1% over the past one year. The gain is almost double of the Zacks classified Engineering/R&D Services industry average of 42.2%.
Despite having a choppy earnings surprise history in recent times, the company has been attracting bullish analyst attention, prior to its fourth-quarter 2016 results, on the back of upward estimate revisions over the past couple of months. This is likely to reassure investors of the company’s prospects.
The Zacks Consensus Estimate for fiscal 2016 earnings inched up from $1.37 to $1.38 over the same time frame, driven by upward estimate revision versus none lower. We believe that the stock’s Bull Run will continue into 2017 and beyond as it has plenty more room to run. Here’s discussing a few highlights.
Riding on Positive Industry Trends
Positive industry trends, including aging grid, shifting generation mix and implementation of clean energy initiatives, are resulting in impressive demand for Quanta Services’ offerings, thus stoking growth. Moreover, the company is currently pursuing several high-voltage electric transmission award opportunities, amid substantial bidding activity, in Australia, Canada and the U.S.
In addition, Quanta Services has a solid base of large transmission projects in its backlog, which should benefit its results in 2017. Also, a gradual shift from coal to gas for power generation, among commercial and residential customers, is expected to boost natural gas pipeline projects over the long run. Thus, rising natural gas demand and strict new pipeline safety regulations are anticipated to drive multi-year opportunities in the natural gas distribution market, which will multiply the prospects for Quanta Services.
Financials Show Promise
The Price to Sales ratio is an important measure of a stock’s valuation, showing how much an investor is paying for each dollar of revenue generated. Quanta Services has a P/S ratio of 0.62, implying that investors are paying investors 62 cents in stock price, for each dollar of revenue generated by the company.
This is lower than the industry average of 0.70, signaling that Quanta Services is undervalued compared to peers. In addition, the company has an impressive projected EPS growth of 37.6% for full-year 2016, miles ahead of the 9.5% mark of the industry.
Overall, this Zacks Rank #2 (Buy) company has a VGM Score of ‘B’. Our VGM Score identifies stocks that have the most attractive value, growth, and momentum characteristics. In fact, our research shows that stocks with VGM Scores of ‘A’ or ‘B’ when combined with a Zacks Rank #1 (Strong Buy) or 2 make solid investment choices.
2017 Looks Brighter
With Donald Trump at the helm of the government and his trillion-dollar infrastructure rebuilding program on the cards, Quanta Services has more reasons to celebrate, entering into 2017. The company is engaged in the building and repairing of electric power, energy and telecommunications infrastructure. Hence, Mr. Trump’s ambitious plans to fortify America’s power grid bode well for the company’s growth.
We believe that the North American electric transmission and distribution markets are likely to act as one of the key growth drivers for the company, as this region continues to deploy more capital in transmission and distribution upgrades. Over the long run, the company envisions government regulations like the EPA's Clean Power Plan and Federal Energy Regulatory Commission (“FERC”) Order 1000, to generate significant incremental electric transmission investment.
Other Stocks to Consider
Some other stocks to be considered by the investors include Middleby Corp. (MIDD - Free Report) , KBR, Inc. (KBR - Free Report) and A. O. Smith Corporation (AOS - Free Report) . All three stocks hold the same Zacks Rank as Quanta Services. You can see the complete list of today’s Zacks #1 Rank stocks here.
Middleby Corporation beat earnings in each of the trailing four quarters, resulting in an average surprise of 15.9%.
KBR has an average positive earnings surprise of 3.8%, over the trailing four quarters, beating estimates twice.
With four repeated earnings beats over the trailing four quarters. A. O. Smith has an average positive surprise of 5.9%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>