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Quanta (PWR) Stock Rises 32.1% in 6 Months: More Room to Run?
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Quanta Services, Inc. (PWR - Free Report) is capitalizing on the increasing demand for sustainable energy solutions. In 2024, the company is poised for significant growth, fueled by expanding opportunities in infrastructure solutions and a surge in project activity related to renewable energy generation.
Quanta stock has gained 32.1% over the past six months, outperforming the Zacks Engineering - R and D Services industry’s 23.4% growth. This Zacks Rank #3 (Hold) stock is also expected to gain from prudent growth strategies and accretive acquisitions.
Yet, the cyclical nature of the business and regulatory issues are headwinds.
Nonetheless, the company’s earnings per share (EPS) estimate for 2024 and 2025 has moved north in the past seven days to $8.32 and $9.46 per share from $8.30 and $9.38 per share, showcasing a growth rate of 16.2% and 13.7% year over year, respectively.
The growth prospect is further solidified with a VGM Score of B, led by a Growth Score of A. The positive trend signifies bullish analysts’ sentiments, robust fundamentals and prospects of an outperformance in the near term.
Image Source: Zacks Investment Research
Let’s take a look at the factors supporting the growth.
High Infrastructural Demand: The company is reaping the benefits of its engagement in advancing and deploying technology solutions across the full spectrum of decarbonization efforts. This encompasses endeavors in carbon management, mitigation, compliance consulting, and the establishment of infrastructure to bolster carbon-neutral energy solutions. Strategically positioned, the company is poised to leverage significant industry trends and assume a prominent role in the energy transition, driving technological progress. Key initiatives, including the expansion of electric vehicle charging infrastructure and the underground installation of electrical infrastructure, are gaining traction and fueling Quanta’s achievements.
Strategic Growth Approach: Quanta is executing a comprehensive growth strategy comprised of three key components. Firstly, the company prioritizes delivering projects promptly, surpassing customer expectations. Secondly, it aims to leverage its core business strengths to extend into complementary adjacent service lines. Thirdly, Quanta remains committed to exploring and integrating new service offerings. With its robust engineering and project management capabilities, the company is well-positioned to seize opportunities in a market landscape currently favoring an engineering, procurement, and construction model.
Solid Backlog Level: The company ended 2023 with a total record backlog of $30.1 billion and a 12-month backlog of $17.23 billion. This compares favorably with the December 2022-end’s 12-month backlog of $13.79 billion and the total backlog of $24.09 billion. This demonstrates the strength of its core operations. Quanta’s optimism stems from healthy backlog levels, which are expected to grow further. This demonstrates the strength of its core operations. Quanta’s optimism stems from healthy backlog levels, which are expected to grow further.
Quanta envisions delivering a 10% organic adjusted EPS compound annual growth rate (CAGR) and more than 15% adjusted EPS CAGR through 2026.
Factors Hindering Growth
Business Cyclicality: The business exhibits a cyclical nature as the demand for Quanta's services is subject to fluctuations. Consequently, the company is particularly susceptible to declines in both government and private industrial expenditures. Throughout its history, fluctuations in commodity prices have affected not only the oil and gas sector but also regions where economic stability is significantly tied to commodity prices.
Challenges in Regulation: Quanta navigates a complex regulatory landscape characterized by stringent requirements for project development. Both the company and its clientele encounter obstacles related to product standards, safety protocols, and environmental safeguards.
Key Picks
Some better-ranked stocks in the Zacks Construction sector are:
Sterling Infrastructure, Inc. (STRL - Free Report) currently sports a Zacks Rank #1 (Strong Buy). STRL delivered a trailing four-quarter earnings surprise of 20.4%, on average. Shares of STRL have gained 50.6% over the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for STRL’s 2024 sales and EPS indicates growth of 11.7% and 11.4%, respectively, from the previous year’s reported levels.
Willdan Group, Inc. (WLDN - Free Report) currently flaunts a Zacks Rank #1. WLDN delivered a trailing four-quarter earnings surprise of 886.3%, on average. Shares of WLDN have gained 35% over the past six months.
The Zacks Consensus Estimate for WLDN’s 2024 sales and EPS indicates growth of 3.9% and 3.4%, respectively, from the previous year’s reported levels.
Altair Engineering Inc. (ALTR - Free Report) currently has a Zacks Rank #2 (Buy). ALTR delivered a trailing four-quarter earnings surprise of 107%, on average. Shares of ALTR have gained 30.8% over the past six months.
The Zacks Consensus Estimate for ALTR’s 2024 sales and EPS indicates growth of 8.5% and 10.6%, respectively, from the previous year’s reported levels.
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Quanta (PWR) Stock Rises 32.1% in 6 Months: More Room to Run?
Quanta Services, Inc. (PWR - Free Report) is capitalizing on the increasing demand for sustainable energy solutions. In 2024, the company is poised for significant growth, fueled by expanding opportunities in infrastructure solutions and a surge in project activity related to renewable energy generation.
Quanta stock has gained 32.1% over the past six months, outperforming the Zacks Engineering - R and D Services industry’s 23.4% growth. This Zacks Rank #3 (Hold) stock is also expected to gain from prudent growth strategies and accretive acquisitions.
Yet, the cyclical nature of the business and regulatory issues are headwinds.
Nonetheless, the company’s earnings per share (EPS) estimate for 2024 and 2025 has moved north in the past seven days to $8.32 and $9.46 per share from $8.30 and $9.38 per share, showcasing a growth rate of 16.2% and 13.7% year over year, respectively.
The growth prospect is further solidified with a VGM Score of B, led by a Growth Score of A. The positive trend signifies bullish analysts’ sentiments, robust fundamentals and prospects of an outperformance in the near term.
Image Source: Zacks Investment Research
Let’s take a look at the factors supporting the growth.
High Infrastructural Demand: The company is reaping the benefits of its engagement in advancing and deploying technology solutions across the full spectrum of decarbonization efforts. This encompasses endeavors in carbon management, mitigation, compliance consulting, and the establishment of infrastructure to bolster carbon-neutral energy solutions. Strategically positioned, the company is poised to leverage significant industry trends and assume a prominent role in the energy transition, driving technological progress. Key initiatives, including the expansion of electric vehicle charging infrastructure and the underground installation of electrical infrastructure, are gaining traction and fueling Quanta’s achievements.
Strategic Growth Approach: Quanta is executing a comprehensive growth strategy comprised of three key components. Firstly, the company prioritizes delivering projects promptly, surpassing customer expectations. Secondly, it aims to leverage its core business strengths to extend into complementary adjacent service lines. Thirdly, Quanta remains committed to exploring and integrating new service offerings. With its robust engineering and project management capabilities, the company is well-positioned to seize opportunities in a market landscape currently favoring an engineering, procurement, and construction model.
Solid Backlog Level: The company ended 2023 with a total record backlog of $30.1 billion and a 12-month backlog of $17.23 billion. This compares favorably with the December 2022-end’s 12-month backlog of $13.79 billion and the total backlog of $24.09 billion. This demonstrates the strength of its core operations. Quanta’s optimism stems from healthy backlog levels, which are expected to grow further. This demonstrates the strength of its core operations. Quanta’s optimism stems from healthy backlog levels, which are expected to grow further.
Quanta envisions delivering a 10% organic adjusted EPS compound annual growth rate (CAGR) and more than 15% adjusted EPS CAGR through 2026.
Factors Hindering Growth
Business Cyclicality: The business exhibits a cyclical nature as the demand for Quanta's services is subject to fluctuations. Consequently, the company is particularly susceptible to declines in both government and private industrial expenditures. Throughout its history, fluctuations in commodity prices have affected not only the oil and gas sector but also regions where economic stability is significantly tied to commodity prices.
Challenges in Regulation: Quanta navigates a complex regulatory landscape characterized by stringent requirements for project development. Both the company and its clientele encounter obstacles related to product standards, safety protocols, and environmental safeguards.
Key Picks
Some better-ranked stocks in the Zacks Construction sector are:
Sterling Infrastructure, Inc. (STRL - Free Report) currently sports a Zacks Rank #1 (Strong Buy). STRL delivered a trailing four-quarter earnings surprise of 20.4%, on average. Shares of STRL have gained 50.6% over the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for STRL’s 2024 sales and EPS indicates growth of 11.7% and 11.4%, respectively, from the previous year’s reported levels.
Willdan Group, Inc. (WLDN - Free Report) currently flaunts a Zacks Rank #1. WLDN delivered a trailing four-quarter earnings surprise of 886.3%, on average. Shares of WLDN have gained 35% over the past six months.
The Zacks Consensus Estimate for WLDN’s 2024 sales and EPS indicates growth of 3.9% and 3.4%, respectively, from the previous year’s reported levels.
Altair Engineering Inc. (ALTR - Free Report) currently has a Zacks Rank #2 (Buy). ALTR delivered a trailing four-quarter earnings surprise of 107%, on average. Shares of ALTR have gained 30.8% over the past six months.
The Zacks Consensus Estimate for ALTR’s 2024 sales and EPS indicates growth of 8.5% and 10.6%, respectively, from the previous year’s reported levels.