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MasTec (MTZ) Stock Rallies 94% in 6 Months: Here's Why
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MasTec, Inc.’s (MTZ - Free Report) stock has skyrocketed 93.8% in the past six months compared with the Zacks Building Products - Heavy Construction industry’s 75.5% growth and the S&P 500 index’s 16.9% rally.
This infrastructure construction company is banking on increasing demand for power, and data capacity and network speed. Also, MTZ’s focus on strategic investments for portfolio diversification positions it well for satiating increased infrastructure demand globally.
Moreover, the company is optimistic about its growth opportunities in 2025 and beyond, given the solid pipeline across its businesses and acquisition synergies. Although near-term softness in the Communications and Power Delivery segments is concerning, MasTec expects strong revenue generation across the segments later in 2024.
For 2024, it expects consolidated revenues to be $12.55 billion, up from $12 billion in the year-ago period. Adjusted earnings are likely to be $2.95 per share, significantly up from $1.97 reported in 2023. The adjusted EBITDA and adjusted EBITDA margin are expected to be $975 million and 7.8%, up from $860.3 million and 7.2% reported in 2023, respectively.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2024 earnings per share (EPS) has moved up to $2.94 from $2.69 in the past 30 days. This implies 49.2% year-over-year growth on 4.6% improvement in net sales.
The company also has a solid earnings surprise history. Its EPS surpassed the consensus estimate in three of the trailing four quarters and missed on one occasion, with the average surprise being 18%. Notably, the company currently has a VGM Score of A, which signifies that MTZ has solid growth prospects and potential to outperform the market in the near term. Also, its Value Score of B indicates it would be a good pick for value-focused investors.
These positive trends signify bullish analysts’ sentiments, indicating robust fundamentals and the expectation of continued outperformance in the near term.
Let's check out the factors shaping the growth prospects of this Zacks Rank #3 (Hold) company.
Strong Visibility in 2024 & Beyond
MasTec’s impressive 18-month backlog of $12.84 billion (up 3.5% sequentially) provides strong visibility into 2024.
Within the Clean Energy and Infrastructure segment, the company expects significant opportunities from the shift toward renewables, driven by its cost competitiveness. For 2024, it expects segment revenues to increase to $4.4 billion with adjusted EBITDA margin in the mid-single digits. Also, it expects to achieve substantial revenue growth beyond 2024.
For the Power Delivery segment, MasTec expects revenues to be $2.7 billion in 2024 and adjusted EBITDA margin in the high-single digits.
For the communication segment, it anticipates revenues to be approximately $3.5 billion, up 6.1% year over year. Adjusted EBITDA margin is expected in high-single digits.
Moreover, the robust demand for its services suggests the potential for double-digit revenues and earnings growth in 2025 and beyond. Initially, the company anticipated long-term annual revenues for the Oil and Gas segment between $1.5 billion and $2 billion. Now, it expects these revenues to consistently exceed the higher end of this range.
Solid Communications Pipeline
MasTec has significantly expanded its relationship with AT&T, its biggest wireless customer. AT&T expanded both the scope and geographic territory on MasTec's core wireless work, besides the maintenance contract announced during the third quarter of 2023. This expansion, along with AT&T's recent announcement of swapping out Nokia equipment for Ericsson over five years, is expected to boost MasTec's wireless business in the coming years. This new award is expected to have a double-digit impact on segment revenues, starting from the second half of 2024 and in 2025.
The company is also encouraged by T-Mobile's recent announcement of the investment in fiber infrastructure. Through a joint venture, T-Mobile will be an anchor tenant and investor in a large nationwide fiber network.
Business Combinations for Expansion
MasTec has keen interest in bolt-on acquisitions. It completed four acquisitions in 2023 and five in 2022. These included certain assets of a telecommunications company specializing in wireless services and a telecommunications construction company focused on broadband and fiber-to-the-home initiatives in the New England area, both within the Communications segment.
This apart, the company has equity interests in certain telecommunications entities, which provide construction services to MasTec. As of Mar 31, 2024, it had an aggregate investment of approximately $22 million in these entities, including $18 million for FM Tech. It also has 49% equity interests in certain entities included within its Communications and Power Delivery segments, for which its aggregate investment totaled approximately $3 million at March-end. It has a 75% equity interest in Confluence Networks, LLC, an undersea fiber-optic communications systems developer, with an aggregate investment of $2.5 million on Mar 31.
Stocks to Consider
Investors interested in some better-ranked stocks can consider Frontdoor, Inc. (FTDR - Free Report) , Quanex Building Products Corp. (NX - Free Report) and Arcosa, Inc. (ACA - Free Report) .
Based in Memphis, TN, Frontdoor provides home service plans in the United States. The firm is benefiting from impressive customer retention rates. Thanks to the robust awareness of the Frontdoor brand, it has been shifting its attention toward capitalizing on customer demand.
Frontdoor’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 286.8%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Houston, TX-based Quanex Building provides components for the fenestration industry worldwide.
Quanex’s earnings surpassed the Zacks Consensus Estimate in the trailing two quarters, the average being 41.9%. It currently sports a Zacks Rank #1.
Dallas, TX-based Arcosa provides infrastructure-related products and solutions. The company remains focused on its long-term vision to lessen the complexity of Arcosa’s overall portfolio and shift its business mix toward less cyclical, higher-margin growth opportunities that leverage core strengths and drive long-term shareholder value creation.
Arcosa’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average being 43.9%. It currently carries a Zacks Rank #2 (Buy).
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MasTec (MTZ) Stock Rallies 94% in 6 Months: Here's Why
MasTec, Inc.’s (MTZ - Free Report) stock has skyrocketed 93.8% in the past six months compared with the Zacks Building Products - Heavy Construction industry’s 75.5% growth and the S&P 500 index’s 16.9% rally.
This infrastructure construction company is banking on increasing demand for power, and data capacity and network speed. Also, MTZ’s focus on strategic investments for portfolio diversification positions it well for satiating increased infrastructure demand globally.
Moreover, the company is optimistic about its growth opportunities in 2025 and beyond, given the solid pipeline across its businesses and acquisition synergies. Although near-term softness in the Communications and Power Delivery segments is concerning, MasTec expects strong revenue generation across the segments later in 2024.
For 2024, it expects consolidated revenues to be $12.55 billion, up from $12 billion in the year-ago period. Adjusted earnings are likely to be $2.95 per share, significantly up from $1.97 reported in 2023. The adjusted EBITDA and adjusted EBITDA margin are expected to be $975 million and 7.8%, up from $860.3 million and 7.2% reported in 2023, respectively.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2024 earnings per share (EPS) has moved up to $2.94 from $2.69 in the past 30 days. This implies 49.2% year-over-year growth on 4.6% improvement in net sales.
The company also has a solid earnings surprise history. Its EPS surpassed the consensus estimate in three of the trailing four quarters and missed on one occasion, with the average surprise being 18%. Notably, the company currently has a VGM Score of A, which signifies that MTZ has solid growth prospects and potential to outperform the market in the near term. Also, its Value Score of B indicates it would be a good pick for value-focused investors.
These positive trends signify bullish analysts’ sentiments, indicating robust fundamentals and the expectation of continued outperformance in the near term.
Let's check out the factors shaping the growth prospects of this Zacks Rank #3 (Hold) company.
Strong Visibility in 2024 & Beyond
MasTec’s impressive 18-month backlog of $12.84 billion (up 3.5% sequentially) provides strong visibility into 2024.
Within the Clean Energy and Infrastructure segment, the company expects significant opportunities from the shift toward renewables, driven by its cost competitiveness. For 2024, it expects segment revenues to increase to $4.4 billion with adjusted EBITDA margin in the mid-single digits. Also, it expects to achieve substantial revenue growth beyond 2024.
For the Power Delivery segment, MasTec expects revenues to be $2.7 billion in 2024 and adjusted EBITDA margin in the high-single digits.
For the communication segment, it anticipates revenues to be approximately $3.5 billion, up 6.1% year over year. Adjusted EBITDA margin is expected in high-single digits.
Moreover, the robust demand for its services suggests the potential for double-digit revenues and earnings growth in 2025 and beyond. Initially, the company anticipated long-term annual revenues for the Oil and Gas segment between $1.5 billion and $2 billion. Now, it expects these revenues to consistently exceed the higher end of this range.
Solid Communications Pipeline
MasTec has significantly expanded its relationship with AT&T, its biggest wireless customer. AT&T expanded both the scope and geographic territory on MasTec's core wireless work, besides the maintenance contract announced during the third quarter of 2023. This expansion, along with AT&T's recent announcement of swapping out Nokia equipment for Ericsson over five years, is expected to boost MasTec's wireless business in the coming years. This new award is expected to have a double-digit impact on segment revenues, starting from the second half of 2024 and in 2025.
The company is also encouraged by T-Mobile's recent announcement of the investment in fiber infrastructure. Through a joint venture, T-Mobile will be an anchor tenant and investor in a large nationwide fiber network.
Business Combinations for Expansion
MasTec has keen interest in bolt-on acquisitions. It completed four acquisitions in 2023 and five in 2022. These included certain assets of a telecommunications company specializing in wireless services and a telecommunications construction company focused on broadband and fiber-to-the-home initiatives in the New England area, both within the Communications segment.
This apart, the company has equity interests in certain telecommunications entities, which provide construction services to MasTec. As of Mar 31, 2024, it had an aggregate investment of approximately $22 million in these entities, including $18 million for FM Tech. It also has 49% equity interests in certain entities included within its Communications and Power Delivery segments, for which its aggregate investment totaled approximately $3 million at March-end. It has a 75% equity interest in Confluence Networks, LLC, an undersea fiber-optic communications systems developer, with an aggregate investment of $2.5 million on Mar 31.
Stocks to Consider
Investors interested in some better-ranked stocks can consider Frontdoor, Inc. (FTDR - Free Report) , Quanex Building Products Corp. (NX - Free Report) and Arcosa, Inc. (ACA - Free Report) .
Based in Memphis, TN, Frontdoor provides home service plans in the United States. The firm is benefiting from impressive customer retention rates. Thanks to the robust awareness of the Frontdoor brand, it has been shifting its attention toward capitalizing on customer demand.
Frontdoor’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 286.8%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Houston, TX-based Quanex Building provides components for the fenestration industry worldwide.
Quanex’s earnings surpassed the Zacks Consensus Estimate in the trailing two quarters, the average being 41.9%. It currently sports a Zacks Rank #1.
Dallas, TX-based Arcosa provides infrastructure-related products and solutions. The company remains focused on its long-term vision to lessen the complexity of Arcosa’s overall portfolio and shift its business mix toward less cyclical, higher-margin growth opportunities that leverage core strengths and drive long-term shareholder value creation.
Arcosa’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average being 43.9%. It currently carries a Zacks Rank #2 (Buy).