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Why Quanta Services' (PWR) Q3 Earnings are Likely to Improve

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Quanta Services, Inc. (PWR - Free Report) is scheduled to report third-quarter 2021 results on Nov 4, before the opening bell.

In the last reported quarter, the company’s top and bottom lines surpassed the Zacks Consensus Estimate by 2.1% and 6%, respectively. Its earnings increased 43.2% from the prior year and revenues improved 19.7%.

Encouragingly, earnings topped analysts’ expectations in nine of the trailing 11 quarters.

Trend in Estimate Revision

The Zacks Consensus Estimate for earnings for the quarter to be reported has increased 0.7% over the past 30 days to $1.47 per share. The said figure indicates a 5% increase from the year-ago earnings of $1.40 per share. The consensus mark for revenues is $3.43 billion, suggesting a 13.5% year-over-year rise.

Quanta Services, Inc. Price and EPS Surprise

Quanta Services, Inc. Price and EPS Surprise

Quanta Services, Inc. price-eps-surprise | Quanta Services, Inc. Quote

Factors to Note

Quanta Services’ third-quarter revenues are expected to have increased owing to higher contribution from both the segments — Electric Power Infrastructure Services and Underground Utility and Infrastructure Solutions.

The Electric Power Infrastructure Services segment (which accounted for 71.6% of second-quarter revenues) is likely to have benefited from broad-based business strength driven by ongoing grid modernization, system hardening, renewable energy interconnections and solid execution. Also, contributions from larger transmission projects underway in Canada and revenues from acquired businesses are likely to have supported bottom-line growth in the to-be-reported quarter. Also, higher profitability from the LUMA joint venture and other integral unconsolidated affiliates along with communications and electric operations might have added to the positives.

The Zacks Consensus Estimate for the segment’s revenues is pegged at $2,329 million, implying 10.5% growth from a year ago.

The Underground Utility and Infrastructure Solutions segment (accounting for 28.4% of second-quarter revenues) has been benefiting from higher demand for gas utility and pipeline integrity services, improved demand for industrial services as well as pent-up demand for the services that were deferred due to the effects of COVID-19 on the downstream market.

During the second-quarter 2021 earnings call, the company slightly moderated its view for the segment’s revenues and margins, primarily due to a lack of visibility into new project awards.

The consensus estimate for the segment’s revenues is pegged at $1,082 million, indicating growth of 18.5% from $913 million reported in the year-ago period.

What Our Model Indicates

Our proven model does not conclusively predict an earnings beat for Quanta Services 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. This is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The company has an Earnings ESP of -2.04% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Worth a Look

Here are some companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.

Jacobs Engineering Group Inc. (J - Free Report) has an Earnings ESP of +6.49% and a Zacks Rank #2.

Fluor Corporation (FLR - Free Report) has an Earnings ESP of +12.50% and carries a Zacks Rank #3.

Thor Industries, Inc. (THO - Free Report) has an Earnings ESP of +3.13% and sports a Zacks Rank #1.