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MasTec (MTZ) Gears Up for Q3 Earnings: What's in the Cards?
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MasTec, Inc. (MTZ - Free Report) is scheduled to report third-quarter 2018 results on Nov 1. In the last reported quarter, the company’s earnings came in at $1.04 per share, beating the Zacks Consensus Estimate of $1.03 by 1%.
How are Estimates Faring?
Let’s take a look at the estimate revision trend in order to get a clear picture of what analysts are thinking about the company prior to the earnings release. For the quarter to be reported, the Zacks Consensus Estimate is currently pegged at $1.23, trending upward over the past 30 days. This also reflects an increase of 50% from the year-ago earnings of 82 cents per share. Revenues are expected to be $1.98 million, up 1.4% year over year.
MasTec’s third-quarter results are expected to gain from the tax reform, major expansion in 5G and FirstNet, fiber extension, along with strong pipeline business in the Oil & Gas segment. The Transmission and Power Generation business will continue to benefit from backlog growth. Also, the pipeline business is poised to benefit from a large multi-year cycle of large project buildouts. Moreover, the Communications segment will benefit from fiber deployments, FirstNet and the beginning of 5G rollouts.
As of Jun 30, 2018, the company achieved a record 18-month backlog of $7.7 billion, reflecting an increase of 47% from the prior-year quarter end. This marks the third consecutive quarter of record total backlog, depicting significantly strong demand in its end markets for 2018, 2019 and beyond.
For the third quarter of 2018, based on updated scheduled projects for large Oil & Gas project activity, the company expects revenues of roughly $2 billion.
Moreover, MasTec, which shares space in the Zacks Building Products - Heavy Construction industry with EMCOR Group, Inc. (EME - Free Report) , Dycom Industries, Inc. (DY - Free Report) and North American Construction Group Ltd. (NOA - Free Report) , is highly focused on its acquisition strategy. During the second quarter of 2018, MasTec acquired Cash Construction, a TX-based infrastructure construction company that will provide exposure to the growing water market. Also, it acquired a leasing company of Oil & Gas specialty pipeline equipment. This buyout will provide a competitive advantage during the current multi-year cycle of significant Oil & Gas pipeline project activity, which is anticipated to continue at record levels.
Meanwhile, the company expects adjusted EBITDA to be approximately $220 million in the quarter to be reported, with adjusted earnings likely to come in at $1.26 per share. The company also anticipates third-quarter cash flow performance to improve significantly. It is also expected to witness ramp up costs in the Communications segment, related to wireless and wireline fiber initiatives in the second half of 2018.
Segment Discussion
Segment wise, the Zacks Consensus Estimate for Oil and Gas revenues, accounting for 47.6% of the total revenues, of $1,032 million reflects a decrease from $1,161 million in the year-ago quarter but an increase from $769 million in the second quarter.
Meanwhile, the consensus estimate for third-quarter revenues for the Communications segment, accounting for 38.2% of the company’s total revenues, is pegged at $669 million, reflecting growth from $611 million in the year-ago period and $619 million in the second quarter.
Revenues from the Power Generation and Industrial segment are expected to grow to $210 million from $97 million in the year-ago quarter and $146 million in the second quarter. The Electrical Transmission segment is expected to generate $97 million of revenues in the third quarter versus $82 million reported in the year-ago quarter and $85 million in the second quarter.
Quantitative Model Prediction
MasTec has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — to increase the odds of an earnings beat.
Earnings ESP: The company’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +2.17%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Currently, MasTec carries a Zacks Rank #2 (Buy), which increases the predictive power of ESP.
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
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MasTec (MTZ) Gears Up for Q3 Earnings: What's in the Cards?
MasTec, Inc. (MTZ - Free Report) is scheduled to report third-quarter 2018 results on Nov 1. In the last reported quarter, the company’s earnings came in at $1.04 per share, beating the Zacks Consensus Estimate of $1.03 by 1%.
How are Estimates Faring?
Let’s take a look at the estimate revision trend in order to get a clear picture of what analysts are thinking about the company prior to the earnings release. For the quarter to be reported, the Zacks Consensus Estimate is currently pegged at $1.23, trending upward over the past 30 days. This also reflects an increase of 50% from the year-ago earnings of 82 cents per share. Revenues are expected to be $1.98 million, up 1.4% year over year.
MasTec, Inc. Price and EPS Surprise
MasTec, Inc. Price and EPS Surprise | MasTec, Inc. Quote
Factors at Play
MasTec’s third-quarter results are expected to gain from the tax reform, major expansion in 5G and FirstNet, fiber extension, along with strong pipeline business in the Oil & Gas segment. The Transmission and Power Generation business will continue to benefit from backlog growth. Also, the pipeline business is poised to benefit from a large multi-year cycle of large project buildouts. Moreover, the Communications segment will benefit from fiber deployments, FirstNet and the beginning of 5G rollouts.
As of Jun 30, 2018, the company achieved a record 18-month backlog of $7.7 billion, reflecting an increase of 47% from the prior-year quarter end. This marks the third consecutive quarter of record total backlog, depicting significantly strong demand in its end markets for 2018, 2019 and beyond.
For the third quarter of 2018, based on updated scheduled projects for large Oil & Gas project activity, the company expects revenues of roughly $2 billion.
Moreover, MasTec, which shares space in the Zacks Building Products - Heavy Construction industry with EMCOR Group, Inc. (EME - Free Report) , Dycom Industries, Inc. (DY - Free Report) and North American Construction Group Ltd. (NOA - Free Report) , is highly focused on its acquisition strategy. During the second quarter of 2018, MasTec acquired Cash Construction, a TX-based infrastructure construction company that will provide exposure to the growing water market. Also, it acquired a leasing company of Oil & Gas specialty pipeline equipment. This buyout will provide a competitive advantage during the current multi-year cycle of significant Oil & Gas pipeline project activity, which is anticipated to continue at record levels.
Meanwhile, the company expects adjusted EBITDA to be approximately $220 million in the quarter to be reported, with adjusted earnings likely to come in at $1.26 per share. The company also anticipates third-quarter cash flow performance to improve significantly. It is also expected to witness ramp up costs in the Communications segment, related to wireless and wireline fiber initiatives in the second half of 2018.
Segment Discussion
Segment wise, the Zacks Consensus Estimate for Oil and Gas revenues, accounting for 47.6% of the total revenues, of $1,032 million reflects a decrease from $1,161 million in the year-ago quarter but an increase from $769 million in the second quarter.
Meanwhile, the consensus estimate for third-quarter revenues for the Communications segment, accounting for 38.2% of the company’s total revenues, is pegged at $669 million, reflecting growth from $611 million in the year-ago period and $619 million in the second quarter.
Revenues from the Power Generation and Industrial segment are expected to grow to $210 million from $97 million in the year-ago quarter and $146 million in the second quarter. The Electrical Transmission segment is expected to generate $97 million of revenues in the third quarter versus $82 million reported in the year-ago quarter and $85 million in the second quarter.
Quantitative Model Prediction
MasTec has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — to increase the odds of an earnings beat.
Earnings ESP: The company’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +2.17%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Currently, MasTec carries a Zacks Rank #2 (Buy), which increases the predictive power of ESP.
Note that we caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
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