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MasTec (NYSE:(MTZ - Free Report) – Free Report)is a $3.3 billion engineering and construction (E&C) company specializing in energy and telecom sector projects. Another strong quarterly report and raised guidance has put the stock in the upper echelon of the Zacks Rank once again.
MasTec delivered a 60% EPS beat generated by much higher-than-expected volumes of Oil & Gas work and strong execution. The company also spoke very positively about their pipeline work for 2018, with a higher backlog than it had at this time last year.
Management increased full year guidance to $6.0 billion in revenues from $5.7 billion previously, and adjusted EPS to $2.73 from $2.45. There was some "pull forward" for the Q2 beat as some of the Rover Pipeline project in West Virginia was recently given the all-clear by WV environmental authorities again.
But as analysts at investment bank Stifel Nicolaus noted "the company now has open spread capacity that it could potentially fill in 4Q. This would represent potential upside to our forecast." The bank raised its EPS estimates and their price target on MasTec from $53 to $55.50.
As estimates stand right now, MasTec looks poised to grow the top line by over 16% this year and the bottom one by 45%. Next year's revenues are projected to grow by 6% to $6.35 billion.
A Great Year, Muted Expectations for the Next One
One investor concern might be that EPS estimates have not risen as dramatically for next year, currently showing a flat performance in the Zacks consensus. But this is most likely an effect of the relative uncertainty surrounding many of these major energy projects which represent 40-45% of MTZ business.
A generally positive market in telecom E&C projects from major builders like AT&T and Verizon also encourages analysts about the MasTech outlook.
But it's the energy sector that keeps them talking right now. FBR Capital raised their price target on MTZ to $66 from $57 this month. Here's what StreetInsider.com reported...
FBR Capital analyst, Alex Rygiel, reiterated his Outperform rating on MTZ shares and raised his price target to $66 from $57 after the company posted exceptional 2Q results. The analyst believes backlog continues to provide good visibility and is expected to grow through the rest of the year.
The analyst believes the Oil & Gas segment will be particularly strong through year end but management is even more positive on the 2018 outlook due to the current backlog, pipeline of projects and solid industry drivers across all of its segments.
Akamai Technologies (NASDAQ:(AKAM - Free Report) – Free Report), the $8 billion provider of cloud data and video delivery/storage solutions, has once again fallen into the cellar of the Zacks Rank as EPS estimates are lowered by Wall Street analysts.
My colleague Brian Bolan wrote about this situation back in late March when shares were trading $63...
Here is the reason for this stock, that normally beats the number, to be the Bear of the Day. The Zacks Consensus Estimate for 2017 has slid from $2.48 in June 2016 to $2.31 in October and recently slipped to $2.20 in March. That is not what investors want to see.
The 2018 Zacks Consensus Estimate has also seen estimates trimmed, as they moved from $3.37 to $2.76 to $2.53 over the same time horizon.
When estimates fall by 20% over several months, the PE must expand for the stock to hold its current price. That is exactly what has been happening for AKAM.
(end of March 27 Bear of the Day excerpt)
We've seen two quarterly updates from Akamai since that report from Brian and things have continued south with the full-year 2017 EPS consensus slipping in the last 60 days from $1.96 to $1.86.
That's right. In late March, AKAM's consensus profit projection was for $2.20 and 60 days ago it had already fallen to $1.96.
This is the trend that weighs on the shares and created a new 52-week low in late July at $45.41.
And this also illustrates the power of the Zacks Rank to identify earnings momentum trends that become either bullish or bearish for stocks.
Meanwhile, 2018 full year estimates have dropped from $2.15 to $2.01 in the past 60 days. Recall that in March the 2018 consensus was still calling for $2.53.
This is a brutal decline in the profit outlook that has manifested itself in the share price and valuation.
If you are thinking about catching this falling knife, you might want to wait until there are signs that the earnings picture is turning around. The Zacks Rank will let you know as it "catches the turn" in analyst forecasts.
Additional content:
Wilbur Ross Sets NAFTA Menu: Global Week Ahead
In the Global Week Ahead, a big event occurs on Wednesday night. North American Free Trade Agreement (NAFTA) renegotiations start with a cabinet level dinner in Washington DC.
The reigning NAFTA trade pact between the U.S., Canada, and Mexico is 23 years old. Renegotiations should start slowly. They should move aggressively to the most sensitive sectors -- auto and dairy -- by October.
Their slate shows us a very ambitious schedule of 7 negotiating rounds by year-end. The parties at the table hope to conclude a renewal by early 2018.
Any delay encounters a 3-pronged schedule of future elections--
· Number One: By early next year, the U.S. Congress will move into campaigning ahead of November 2018 mid-term elections.
· Number Two: Mexico’s general election will be held on July 1, 2018. Current President Enrique Peña Nieto cannot run again. His ruling, centrist Institutional Revolutionary Party (PRI), a party that has ruled for much of Mexico’s modern history, is the underdog in polling.
The PRI recently polled just 17% support across eligible decided voters in a survey done by the Reforma newspaper. The left wing MORENA party garnered 28% support. The center-right National Action Party polled 23%.
A hard line in renegotiations by the U.S. will play to left-wing Mexican opposition candidates. That could risk derailing talks.
· Number Three: Canada faces a general election on or before October 21, 2019. The Trudeau administration and its opposition swing into campaign mode sometime in early 2019.
Caroline Freund, a senior trade fellow at the Peterson Institute for International Economics in DC, summed talks up to Business Insider in this way — "The Trump administration has framed their NAFTA negotiating objectives around reducing the trade deficit with Mexico. If they don't touch autos, there's no way of getting at what they want."
Among tools U.S. Trade Representative Robert Lighthizer may seek to boost U.S. auto employment is strengthening the rules of origin to shut out more parts from Asia. He could also seek an unprecedented U.S.-specific content requirement for Mexican vehicles.
The auto industry is opposed to such a carve-out, or to increasing the percentage of a vehicle's value that must come from the region above the current 62.5%. This is already the highest of any global trade bloc.
The automakers say this would raise costs and disrupt a complex supply chain that sees parts crisscrossing NAFTA borders and has made North American car production competitive with Asia and Europe.
If U.S. Commerce Secretary Wilbur Ross gets his way, it would be harder to reach the 62.5% content threshold because the "tracing list" of parts that count towards that goal would be modernized.
He argues the current rules are too loose and allow a tariff-free "back door" for Chinese auto parts.
Top Zacks #1 Rank (STRONG BUY) Stocks—
With NAFTA talks likely to focus on U.S. autos, maybe look to Europe instead. Collectively, their automakers look sharp to covering analysts at the moment.
Here are three…
Daimler AG(OTCMKTS: – Free Report): This $75B in market cap German automaker is getting its fair share of abuse in the current German elections. But the stock is holding up nicely. The Value score of B is worth noting too.
Bayerische Motoren Werke (AG)(OTCMKTS:(BAMXF - Free Report) – Free Report): This is BMW, folks. This $56 billion market cap German automaker is also a Zacks #1 Rank stock. The Zacks Value score is B again.
Volvo AB(OTCMKTS:(VLVLY - Free Report) – Free Report): This is the smallest (at $34B in market cap) of the three European auto stocks I am bringing to your attention. It gets both a B in Zacks Value and an A in Zacks Growth.
Key Global Macro –
Chinese macro data is an early focal point. On Monday, that country released retail sales (up +10.6%) and industrial production figures. Property prices hit on Thursday.
On Tuesday, Germany’s latest GDP reading comes out.
On Wednesday, the latest Fed minutes come out.
On Thursday, Australia’s latest unemployment rate comes out.
On Monday, Mainland China’s retail sales came in at 10.6% y/y.
On Tuesday, Germany’s preliminary GDP reading for the 2nd quarter comes out. The prior reading was +0.6% q/q and +1.7% y/y.
Brazil’s retail sales may bounce back this month, going up +1.0% m/m, after a -0.7% m/m downdraft.
The U.S. NAHB builder’s survey comes out. The prior reading was 64.
On Wednesday, the ILO unemployment rate comes out. It should be in a holding pattern at 4.5% there. What happens to the U.K. is usually what happens to the USA.
U.S. building permit, and housing starts come out. Look for 1.24M and 1.25M respectively.
On Thursday, the unemployment rate in Australia comes out. It was 5.6%.
The unemployment rate in the Netherlands comes out too. It was 4.9%.
The U.K.’s retail sales (ex-auto and fuel) come out. Look for +2.2% y/y.
U.S. initial claims come out. Look for 244K. That’s a strong number.
The unemployment rate in Russia is 5.1%.
The Fed’s Kaplan speaks in TX and Kashkari speaks in MN.
On Friday, the University of Michigan sentiment index comes out. The prior was 93.4.
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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MasTec, Akamai Technologies, Daimler, Bayerische Motoren Werke and Volvo AB highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – August 15, 2017 – Zacks Equity Research MasTec (NYSE:(MTZ - Free Report) – Free Report) as the Bull of the Day, Akamai Technologies (NASDAQ:(AKAM - Free Report) – Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onDaimler AG(OTCMKTS: – Free Report), Bayerische Motoren Werke (AG) (OTCMKTS:(BAMXF - Free Report) – Free Report) and Volvo AB (OTCMKTS:(VLVLY - Free Report) – Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
MasTec (NYSE:(MTZ - Free Report) – Free Report)is a $3.3 billion engineering and construction (E&C) company specializing in energy and telecom sector projects. Another strong quarterly report and raised guidance has put the stock in the upper echelon of the Zacks Rank once again.
MasTec delivered a 60% EPS beat generated by much higher-than-expected volumes of Oil & Gas work and strong execution. The company also spoke very positively about their pipeline work for 2018, with a higher backlog than it had at this time last year.
Management increased full year guidance to $6.0 billion in revenues from $5.7 billion previously, and adjusted EPS to $2.73 from $2.45. There was some "pull forward" for the Q2 beat as some of the Rover Pipeline project in West Virginia was recently given the all-clear by WV environmental authorities again.
But as analysts at investment bank Stifel Nicolaus noted "the company now has open spread capacity that it could potentially fill in 4Q. This would represent potential upside to our forecast." The bank raised its EPS estimates and their price target on MasTec from $53 to $55.50.
As estimates stand right now, MasTec looks poised to grow the top line by over 16% this year and the bottom one by 45%. Next year's revenues are projected to grow by 6% to $6.35 billion.
A Great Year, Muted Expectations for the Next One
One investor concern might be that EPS estimates have not risen as dramatically for next year, currently showing a flat performance in the Zacks consensus. But this is most likely an effect of the relative uncertainty surrounding many of these major energy projects which represent 40-45% of MTZ business.
A generally positive market in telecom E&C projects from major builders like AT&T and Verizon also encourages analysts about the MasTech outlook.
But it's the energy sector that keeps them talking right now. FBR Capital raised their price target on MTZ to $66 from $57 this month. Here's what StreetInsider.com reported...
FBR Capital analyst, Alex Rygiel, reiterated his Outperform rating on MTZ shares and raised his price target to $66 from $57 after the company posted exceptional 2Q results. The analyst believes backlog continues to provide good visibility and is expected to grow through the rest of the year.
The analyst believes the Oil & Gas segment will be particularly strong through year end but management is even more positive on the 2018 outlook due to the current backlog, pipeline of projects and solid industry drivers across all of its segments.
Bear of the Day:
Akamai Technologies (NASDAQ:(AKAM - Free Report) – Free Report), the $8 billion provider of cloud data and video delivery/storage solutions, has once again fallen into the cellar of the Zacks Rank as EPS estimates are lowered by Wall Street analysts.
My colleague Brian Bolan wrote about this situation back in late March when shares were trading $63...
Here is the reason for this stock, that normally beats the number, to be the Bear of the Day. The Zacks Consensus Estimate for 2017 has slid from $2.48 in June 2016 to $2.31 in October and recently slipped to $2.20 in March. That is not what investors want to see.
The 2018 Zacks Consensus Estimate has also seen estimates trimmed, as they moved from $3.37 to $2.76 to $2.53 over the same time horizon.
When estimates fall by 20% over several months, the PE must expand for the stock to hold its current price. That is exactly what has been happening for AKAM.
(end of March 27 Bear of the Day excerpt)
We've seen two quarterly updates from Akamai since that report from Brian and things have continued south with the full-year 2017 EPS consensus slipping in the last 60 days from $1.96 to $1.86.
That's right. In late March, AKAM's consensus profit projection was for $2.20 and 60 days ago it had already fallen to $1.96.
This is the trend that weighs on the shares and created a new 52-week low in late July at $45.41.
And this also illustrates the power of the Zacks Rank to identify earnings momentum trends that become either bullish or bearish for stocks.
Meanwhile, 2018 full year estimates have dropped from $2.15 to $2.01 in the past 60 days. Recall that in March the 2018 consensus was still calling for $2.53.
This is a brutal decline in the profit outlook that has manifested itself in the share price and valuation.
If you are thinking about catching this falling knife, you might want to wait until there are signs that the earnings picture is turning around. The Zacks Rank will let you know as it "catches the turn" in analyst forecasts.
Additional content:
Wilbur Ross Sets NAFTA Menu: Global Week Ahead
In the Global Week Ahead, a big event occurs on Wednesday night. North American Free Trade Agreement (NAFTA) renegotiations start with a cabinet level dinner in Washington DC.
The reigning NAFTA trade pact between the U.S., Canada, and Mexico is 23 years old. Renegotiations should start slowly. They should move aggressively to the most sensitive sectors -- auto and dairy -- by October.
Their slate shows us a very ambitious schedule of 7 negotiating rounds by year-end. The parties at the table hope to conclude a renewal by early 2018.
Any delay encounters a 3-pronged schedule of future elections--
· Number One: By early next year, the U.S. Congress will move into campaigning ahead of November 2018 mid-term elections.
· Number Two: Mexico’s general election will be held on July 1, 2018. Current President Enrique Peña Nieto cannot run again. His ruling, centrist Institutional Revolutionary Party (PRI), a party that has ruled for much of Mexico’s modern history, is the underdog in polling.
The PRI recently polled just 17% support across eligible decided voters in a survey done by the Reforma newspaper. The left wing MORENA party garnered 28% support. The center-right National Action Party polled 23%.
A hard line in renegotiations by the U.S. will play to left-wing Mexican opposition candidates. That could risk derailing talks.
· Number Three: Canada faces a general election on or before October 21, 2019. The Trudeau administration and its opposition swing into campaign mode sometime in early 2019.
Caroline Freund, a senior trade fellow at the Peterson Institute for International Economics in DC, summed talks up to Business Insider in this way — "The Trump administration has framed their NAFTA negotiating objectives around reducing the trade deficit with Mexico. If they don't touch autos, there's no way of getting at what they want."
Among tools U.S. Trade Representative Robert Lighthizer may seek to boost U.S. auto employment is strengthening the rules of origin to shut out more parts from Asia. He could also seek an unprecedented U.S.-specific content requirement for Mexican vehicles.
The auto industry is opposed to such a carve-out, or to increasing the percentage of a vehicle's value that must come from the region above the current 62.5%. This is already the highest of any global trade bloc.
The automakers say this would raise costs and disrupt a complex supply chain that sees parts crisscrossing NAFTA borders and has made North American car production competitive with Asia and Europe.
If U.S. Commerce Secretary Wilbur Ross gets his way, it would be harder to reach the 62.5% content threshold because the "tracing list" of parts that count towards that goal would be modernized.
He argues the current rules are too loose and allow a tariff-free "back door" for Chinese auto parts.
Top Zacks #1 Rank (STRONG BUY) Stocks—
With NAFTA talks likely to focus on U.S. autos, maybe look to Europe instead. Collectively, their automakers look sharp to covering analysts at the moment.
Here are three…
Daimler AG(OTCMKTS: – Free Report): This $75B in market cap German automaker is getting its fair share of abuse in the current German elections. But the stock is holding up nicely. The Value score of B is worth noting too.
Bayerische Motoren Werke (AG)(OTCMKTS:(BAMXF - Free Report) – Free Report): This is BMW, folks. This $56 billion market cap German automaker is also a Zacks #1 Rank stock. The Zacks Value score is B again.
Volvo AB(OTCMKTS:(VLVLY - Free Report) – Free Report): This is the smallest (at $34B in market cap) of the three European auto stocks I am bringing to your attention. It gets both a B in Zacks Value and an A in Zacks Growth.
Key Global Macro –
Chinese macro data is an early focal point. On Monday, that country released retail sales (up +10.6%) and industrial production figures. Property prices hit on Thursday.
On Tuesday, Germany’s latest GDP reading comes out.
On Wednesday, the latest Fed minutes come out.
On Thursday, Australia’s latest unemployment rate comes out.
On Monday, Mainland China’s retail sales came in at 10.6% y/y.
On Tuesday, Germany’s preliminary GDP reading for the 2nd quarter comes out. The prior reading was +0.6% q/q and +1.7% y/y.
Brazil’s retail sales may bounce back this month, going up +1.0% m/m, after a -0.7% m/m downdraft.
The U.S. NAHB builder’s survey comes out. The prior reading was 64.
On Wednesday, the ILO unemployment rate comes out. It should be in a holding pattern at 4.5% there. What happens to the U.K. is usually what happens to the USA.
U.S. building permit, and housing starts come out. Look for 1.24M and 1.25M respectively.
On Thursday, the unemployment rate in Australia comes out. It was 5.6%.
The unemployment rate in the Netherlands comes out too. It was 4.9%.
The U.K.’s retail sales (ex-auto and fuel) come out. Look for +2.2% y/y.
U.S. initial claims come out. Look for 244K. That’s a strong number.
The unemployment rate in Russia is 5.1%.
The Fed’s Kaplan speaks in TX and Kashkari speaks in MN.
On Friday, the University of Michigan sentiment index comes out. The prior was 93.4.
Get today’s Zacks #1 Stock of the Day with your free subscription to Profit from the Pros newsletter:
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
Get the full Report on MTZ - FREE
Get the full Report on AKAM - FREE
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Get the full Report on BAMXF - FREE
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.