A month has gone by since the last earnings report for MasTec (
MTZ Quick Quote MTZ - Free Report) . Shares have added about 2.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is MasTec due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
MasTec ( MTZ Quick Quote MTZ - Free Report) Q4 Earnings Surpass Estimates
MasTec, Inc. reported fourth-quarter 2020 results, wherein earnings beat the Zacks Consensus Estimate and increased on a year-over-year basis. However, revenues missed the consensus mark and declined year over year owing to the coronavirus pandemic. Notably, the bottom line beat the consensus mark for the 10th straight quarter.
George Pita, MasTec's executive vice president and chief financial officer, said, "During 2020, despite the impacts of the pandemic, we maintained a strong cash flow profile, with record annual 2020 cash flow from operations of $937 million and 2020 annual free cash flow exceeding adjusted net income by over $380 million.” Inside the Headlines
For the fourth quarter, MasTec reported adjusted earnings per share of $1.75, which surpassed the Zacks Consensus Estimate of $1.67 by 4.8%. Moreover, the metric grew 25% on a year-over-year basis from $1.40 a year ago.
Revenues of $1,636.8 million missed the consensus mark of $1,810 million by 9.6%. It also declined 4.2% on a year-over-year basis. At the end of the reported quarter, the company had an 18-month backlog of $7.9 billion, up from $7.7 billion as of Sep 30, 2020 but down from $8 billion on Dec 31, 2019. Segment Update
Communications fell 15.7% year over year to $568.4 million. Adjusted EBITDA margin, however, rose 310 basis points (bps) to 11.1%. Electrical Transmission segment revenues came in at $125.8 million, up 8.8% from the year-ago quarter. However, adjusted EBITDA margin came in at 0.6%, down 740 bps from the prior-year quarter. Revenues from Clean Energy and Infrastructure (primarily known as Power Generation and Industrial) increased 3.8% year over year to $345.6 million. However, adjusted EBITDA margin came in at 3.2%, contracting 450 bps year over year. Revenues from the Oil and Gas segment gained 2.2% year over year to $599.7 million. Also, adjusted EBITDA margin improved an impressive 970 bps to 32.7%. Operational Update
The company reported adjusted EBITDA of $261.5 million, up 24.4% from the prior-year period. Adjusted EBITDA margin expanded 370 bps to 16%.
Adjusted EPS came in at $5.11, down from $5.46 in 2019. Revenues of $6.32 billion dropped from $7.18 billion in 2019. Adjusted EBITDA margin of 12.8% expanded 110 bps from the last year.
As of Dec 31, 2020, MasTec had cash and cash equivalents of $423.1 million compared with $71.4 million at 2019-end. For 2020, the company provided $937.3 million of cash from operating activities compared with $550.3 million a year ago. Free cash flow was $760.7 million, up from $458.8 million in 2019.
It has been able to reduce 2020-end net debt level by $481 million from the last year, the lowest level in more than seven years. Net debt at 2020-end amounted to $879.6 million, down from $1,361 million at 2019-end. 2021 Guidance
The company’s 2021 guidance reflects 24% revenue improvement, with all business segments expected to approach double-digit top-line growth year over year. It also expects non-Oil & Gas segments to witness 40% adjusted EBITDA growth in 2021, highlighting the strength of diversified portfolio of services. MasTec expects 2021 to be a record year and developing trends in communications, clean energy and infrastructure to create strong opportunities for additional growth in 2022, and beyond.
The company expects to generate record revenues of $7.8 billion in 2021. Adjusted EBITDA is expected to be $875 million, representing a record level, or 11.2% of revenues. Adjusted earnings are anticipated to be $5 per share, indicating an increase from $5.11 in 2020. First-Quarter View
MasTec expects first-quarter revenues of $1.65 billion. Adjusted EBITDA is estimated to be $172 million, with a margin of 10.4%. Adjusted earnings per share for the first quarter are expected to be 80 cents.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted 22.29% due to these changes.
Currently, MasTec has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision looks promising. Notably, MasTec has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.