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Here's Why You Should Add Mastec (MTZ) to Your Portfolio Now
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MasTec, Inc. (MTZ - Free Report) reported better-than-expected third-quarter results, mainly owing to increased large Oil & Gas project activity. Also, the company has won several large projects across multiple segments subsequent to the quarter end. Given possibilities of future wins, the company is expected to end 2018 with record backlogs.
As a result, the company’s share price has been increasing recently. If you haven’t taken advantage of the share price appreciation yet, the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Strong Q3 Performance, Upbeat Guidance
MasTec posted third-quarter 2017 adjusted earnings per share of 82 cents, up 1.2% year over year, surpassing the Zacks Consensus Estimate of 74 cents. Net sales improved 23% year over year to a record $1.96 billion in the quarter, outpacing the Zacks Consensus Estimate of $1.65 billion.
The Oil and Gas segment’s revenues in the reported quarter improved 57.7% to $1.16 billion over the third-quarter 2016 level and drove the top and bottom lines. Backed by significant project wins subsequent to the third quarter, MasTec expects record backlogs in the year-end.
Meanwhile, the company has hiked annual guidance for three times in a row. Revenues are projected at record levels of $6.3 billion for fiscal 2017, 24% higher than the previous year. Annual adjusted EBITDA are expected grow 32% year over year to be around $630 million. Adjusted earnings per share are projected at $2.80, up 47% compared with $1.90 in fiscal 2016.
Positive Earnings Surprise History
MasTec has an impressive earnings surprise history, outpacing the Zacks Consensus Estimate in all the trailing four quarters, delivering a positive average earnings surprise of 28.05%.
Estimates Moved North
The company’s estimates for 2017 and 2018, have moved up in the past 30 days, reflecting the positive outlook of analysts on the stock. For 2017, the Zacks Consensus Estimate has climbed 2% to $2.79 per share and for 2018, the same has inched up 1% to $3.03 per share.
Zacks Rank
MasTec sports a Zacks Rank #1 (Strong Buy) and has a VGM score of B. Here V stands for Value, G for Growth and M for Momentum. The company’s score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. In fact, our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or 2 make solid investment choices.
Price Performance
MasTec's shares have outperformed the industry in the past year. The stock has gained 11.6%, as against the industry’s decline of 4.4% in the same time frame.
Stock Seems Undervalued
MasTec has a trailing 12-month price earnings (P/E) ratio of 13.26 while the industry’s average trailing 12-month P/E ratio is 26.81. Based on this ratio, the stock seems undervalued.
Return on Equity
MasTec’s trailing 12-month return on equity (ROE) supports its growth potential. Its ROE in the trailing 12 months is 21.7%, way more than its industry’s average of 6.4%. This reflects the company’s efficient usage of shareholders’ funds.
Growth Prospects
MasTec’s wireless business has significant potential, given that substantial investments are expected in wireless infrastructure related to the densification associated with 5G deployment. Every major carrier has publicly disclosed plans and initiatives for 5G. Also, AT&T Inc. (T - Free Report) was awarded FirstNet, a nationwide public safety wireless network. Currently, 28 states have opted into FirstNet. Both 5G and FirstNet will be catalyst for 2018 revenues and will provide a significant boost in 2019.
In its wireline markets, fiber expansion continues to be a growth driver. Also, there has been a significant rise in margins as a result of the operational improvements carried out in the Power Generation and Industrial segment. The top line is also likely to grow in the segment as project pipeline and bidding activity continues to be strong. For the Electrical Transmission business, prospects of large industry awards are likely to improve results in 2018 and beyond.
In the Oil & Gas segment, the pipeline business is being driven by strong demand in the United States.
MasTec has a long-term expected earnings growth rate of 14%.
EMCOR delivered an average positive earnings surprise of 16.96% for the trailing four quarters. The stock has gained 9.1% in the previous year.
Sterling Construction pulled off an average earnings surprise of 65.19% for the last four quarters. The stock has surged 106.3% in the prior year.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
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Here's Why You Should Add Mastec (MTZ) to Your Portfolio Now
MasTec, Inc. (MTZ - Free Report) reported better-than-expected third-quarter results, mainly owing to increased large Oil & Gas project activity. Also, the company has won several large projects across multiple segments subsequent to the quarter end. Given possibilities of future wins, the company is expected to end 2018 with record backlogs.
As a result, the company’s share price has been increasing recently. If you haven’t taken advantage of the share price appreciation yet, the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Strong Q3 Performance, Upbeat Guidance
MasTec posted third-quarter 2017 adjusted earnings per share of 82 cents, up 1.2% year over year, surpassing the Zacks Consensus Estimate of 74 cents. Net sales improved 23% year over year to a record $1.96 billion in the quarter, outpacing the Zacks Consensus Estimate of $1.65 billion.
The Oil and Gas segment’s revenues in the reported quarter improved 57.7% to $1.16 billion over the third-quarter 2016 level and drove the top and bottom lines. Backed by significant project wins subsequent to the third quarter, MasTec expects record backlogs in the year-end.
Meanwhile, the company has hiked annual guidance for three times in a row. Revenues are projected at record levels of $6.3 billion for fiscal 2017, 24% higher than the previous year. Annual adjusted EBITDA are expected grow 32% year over year to be around $630 million. Adjusted earnings per share are projected at $2.80, up 47% compared with $1.90 in fiscal 2016.
Positive Earnings Surprise History
MasTec has an impressive earnings surprise history, outpacing the Zacks Consensus Estimate in all the trailing four quarters, delivering a positive average earnings surprise of 28.05%.
Estimates Moved North
The company’s estimates for 2017 and 2018, have moved up in the past 30 days, reflecting the positive outlook of analysts on the stock. For 2017, the Zacks Consensus Estimate has climbed 2% to $2.79 per share and for 2018, the same has inched up 1% to $3.03 per share.
Zacks Rank
MasTec sports a Zacks Rank #1 (Strong Buy) and has a VGM score of B. Here V stands for Value, G for Growth and M for Momentum. The company’s score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. In fact, our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or 2 make solid investment choices.
Price Performance
MasTec's shares have outperformed the industry in the past year. The stock has gained 11.6%, as against the industry’s decline of 4.4% in the same time frame.
Stock Seems Undervalued
MasTec has a trailing 12-month price earnings (P/E) ratio of 13.26 while the industry’s average trailing 12-month P/E ratio is 26.81. Based on this ratio, the stock seems undervalued.
Return on Equity
MasTec’s trailing 12-month return on equity (ROE) supports its growth potential. Its ROE in the trailing 12 months is 21.7%, way more than its industry’s average of 6.4%. This reflects the company’s efficient usage of shareholders’ funds.
Growth Prospects
MasTec’s wireless business has significant potential, given that substantial investments are expected in wireless infrastructure related to the densification associated with 5G deployment. Every major carrier has publicly disclosed plans and initiatives for 5G. Also, AT&T Inc. (T - Free Report) was awarded FirstNet, a nationwide public safety wireless network. Currently, 28 states have opted into FirstNet. Both 5G and FirstNet will be catalyst for 2018 revenues and will provide a significant boost in 2019.
In its wireline markets, fiber expansion continues to be a growth driver. Also, there has been a significant rise in margins as a result of the operational improvements carried out in the Power Generation and Industrial segment. The top line is also likely to grow in the segment as project pipeline and bidding activity continues to be strong. For the Electrical Transmission business, prospects of large industry awards are likely to improve results in 2018 and beyond.
In the Oil & Gas segment, the pipeline business is being driven by strong demand in the United States.
MasTec has a long-term expected earnings growth rate of 14%.
Other Stocks to Consider
Some other top-ranked stocks worth considering in the sector include EMCOR Group, Inc. (EME - Free Report) and Sterling Construction Company, Inc. (STRL - Free Report) sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
EMCOR delivered an average positive earnings surprise of 16.96% for the trailing four quarters. The stock has gained 9.1% in the previous year.
Sterling Construction pulled off an average earnings surprise of 65.19% for the last four quarters. The stock has surged 106.3% in the prior year.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>