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What Awaits Infrastructure and Energy (IEA) in Q3 Earnings?

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Infrastructure and Energy Alternatives, Inc. (IEA - Free Report) or IEA is scheduled to release third-quarter 2020 results on Nov 9, after the closing bell.

In the last reported quarter, the company’s adjusted earnings topped the Zacks Consensus Estimate by 325%. In the second quarter, the company reported earnings of 9 cents per share against a loss of 61 cents a year ago. Revenues also rose 46.5% year over year.

The company’s earnings topped the consensus mark in two of the last four quarters and missed on the other two occasions, with the average surprise being 82.6%.

Trend in Estimate Revision

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share has been unchanged at 16 cents per share over the past 30 days. This indicates a decrease of 50% from the year-ago quarter.

Factors to Note

IEA — a leading infrastructure construction company with specialized energy and heavy civil expertise — is expected to have generated higher revenues in the third quarter, mainly buoyed by its focus on the construction of renewable power production capacity, particularly from wind and solar.

The Renewables segment — accounting for 68% of total revenues — is expected to have registered robust growth, courtesy of tailwinds such as state renewable energy mandates and the push for clean energy. Several Solar and wind projects are anticipated to have aided the company’s top line. Several wind repowering projects like those in South Dakota, Minnesota and Texas bode well. Also, mechanical overhauls of replacement of major components of the existing turbines and increase in the amount of power provided by each wind farm to the respective geographic region served are expected to have aided the company’s Renewables unit.

Also, IEA has been diversifying the business beyond renewables and its Specialty Civil segment has been working particularly within the rail infrastructure space. This is likely to have benefited the company’s segmental revenues in the third quarter. However, the pandemic has had a devastating impact on the budgets of federal and state transportation agencies, and stay-at-home orders significantly reduced fuel tax receipts. Hence, the company’s public infrastructure sector portfolio is expected to have faced the headwinds related to the pandemic as the availability of transportation infrastructure funds is unfortunately far below the needs.

Meanwhile, the company created job level contingencies for potential pandemic costs at larger projects. These contingencies may have weighed on its gross margin.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict an earnings beat for IEA this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: IEA — which shares space with FirstService Corporation (FSV - Free Report) , Redfin Corporation (RDFN - Free Report) and PennyMac Mortgage Investment Trust (PMT - Free Report) in the Zacks Real Estate – Operations industry — currently carries a Zacks Rank #3.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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