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Will Quanta Services Grow with Trump Infrastructure Plan?
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President Donald Trump’s ‘big statement’ at the congressional address earlier this month, concerning the legislation of a $1 trillion infrastructure plan, only reaffirms the “Rebuilding America” rhetoric that has been doing the rounds since his campaigning days.
Trump was quoted as saying, “Crumbling infrastructure will be replaced with new roads, bridges, tunnels, airports and railways gleaming across our beautiful land.”
Currently, infrastructure related companies are basking in the optimism that increased spending will give them a much needed boost. One such firm, Quanta Services, Inc. (PWR - Free Report) , has caught our attention today, as we believe it enjoys consequential long-term growth opportunities.
The engineering, procurement and construction services provider has had a solid run on the bourse last year, having returned 72.1%, higher than the Zacks categorized Engineering R/D Services industry’s average return of 26.6%. The stock has gained 4.5% year to date, in stark contrast to the industry’s decline of 2.8%. This is probably due to investors’ expection that the company will gain substantially from Trump’s pro infrastructure policies.
Core Business Strong
Quanta Services believes that the delivery of energized services sets it apart from its competitors and helps it win new business. The company continues to expect a strong rebound in its end markets in coming quarters, on the back of solid growth drivers like an aging grid, shifting generation mix and implementation of clean energy initiatives.
Investments in transmission and distribution networks, particularly in North America, have acted as a major growth churner as the region continues to deploy more capital to improve system reliability and deliver renewable electricity. Further, Quanta Services has a strong base of large transmission projects in its backlog, which should boost its results in 2017.
This apart, the company’s oil and gas business is also witnessing modest recovery. It remains confident of securing multiple mainline projects worth billions of dollars in 2017 and 2018. Moreover, a gradual shift from coal to gas for power generation from commercial and residential customers is expected to boost natural gas pipeline projects in the long run. Positive industry trends, favorable regulations and a revamped business model are expected to stoke growth, going forward.
Impressive Fundamentals
Quanta Services has also been witnessing solid activity on the earnings estimate revision front. Analysts have become increasingly bullish on the company over the past two months, as the Zacks Consensus Estimate for first-quarter 2017 earnings has trended up, from 36 cents to 43 cents per share.
Also, over the past 60 days, the company has seen three upward estimate revisions compared to one downward, which led the Zacks Consensus Estimate for second-quarter 2017 earnings to go from 48 cents to 50 cents.
Quanta Services also displays a Zacks VGM score of ‘A’. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics. A good VGM score indicates stronger chances of success.
Stocks to Consider
Quanta Services currently holds a Zacks Rank #3 (Hold). Better-ranked stocks in the broader sector include II-VI Incorporated , Applied Industrial Technologies Inc. (AIT - Free Report) and Donaldson Company, Inc. (DCI - Free Report) . While II-VI Incorporated sports a Zacks Rank #1 (Strong Buy), Applied Industrial Technologies and Donaldson hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
II-VI Incorporated has registered a remarkable positive average surprise of over 59.2% for the last four quarters, driven by four remarkable consecutive beats.
Applied Industrial Technologies managed to beat estimates thrice over the trailing four quarters and has a positive earnings surprise of 6.2%.
With three beats over the trailing four quarters, Donaldson has a positive average earnings surprise of 5.9%.
More Stock News: This Is Bigger than the iPhone!
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Will Quanta Services Grow with Trump Infrastructure Plan?
President Donald Trump’s ‘big statement’ at the congressional address earlier this month, concerning the legislation of a $1 trillion infrastructure plan, only reaffirms the “Rebuilding America” rhetoric that has been doing the rounds since his campaigning days.
Trump was quoted as saying, “Crumbling infrastructure will be replaced with new roads, bridges, tunnels, airports and railways gleaming across our beautiful land.”
Currently, infrastructure related companies are basking in the optimism that increased spending will give them a much needed boost. One such firm, Quanta Services, Inc. (PWR - Free Report) , has caught our attention today, as we believe it enjoys consequential long-term growth opportunities.
The engineering, procurement and construction services provider has had a solid run on the bourse last year, having returned 72.1%, higher than the Zacks categorized Engineering R/D Services industry’s average return of 26.6%. The stock has gained 4.5% year to date, in stark contrast to the industry’s decline of 2.8%. This is probably due to investors’ expection that the company will gain substantially from Trump’s pro infrastructure policies.
Core Business Strong
Quanta Services believes that the delivery of energized services sets it apart from its competitors and helps it win new business. The company continues to expect a strong rebound in its end markets in coming quarters, on the back of solid growth drivers like an aging grid, shifting generation mix and implementation of clean energy initiatives.
Investments in transmission and distribution networks, particularly in North America, have acted as a major growth churner as the region continues to deploy more capital to improve system reliability and deliver renewable electricity. Further, Quanta Services has a strong base of large transmission projects in its backlog, which should boost its results in 2017.
This apart, the company’s oil and gas business is also witnessing modest recovery. It remains confident of securing multiple mainline projects worth billions of dollars in 2017 and 2018. Moreover, a gradual shift from coal to gas for power generation from commercial and residential customers is expected to boost natural gas pipeline projects in the long run. Positive industry trends, favorable regulations and a revamped business model are expected to stoke growth, going forward.
Impressive Fundamentals
Quanta Services has also been witnessing solid activity on the earnings estimate revision front. Analysts have become increasingly bullish on the company over the past two months, as the Zacks Consensus Estimate for first-quarter 2017 earnings has trended up, from 36 cents to 43 cents per share.
Also, over the past 60 days, the company has seen three upward estimate revisions compared to one downward, which led the Zacks Consensus Estimate for second-quarter 2017 earnings to go from 48 cents to 50 cents.
Quanta Services also displays a Zacks VGM score of ‘A’. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics. A good VGM score indicates stronger chances of success.
Stocks to Consider
Quanta Services currently holds a Zacks Rank #3 (Hold). Better-ranked stocks in the broader sector include II-VI Incorporated , Applied Industrial Technologies Inc. (AIT - Free Report) and Donaldson Company, Inc. (DCI - Free Report) . While II-VI Incorporated sports a Zacks Rank #1 (Strong Buy), Applied Industrial Technologies and Donaldson hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
II-VI Incorporated has registered a remarkable positive average surprise of over 59.2% for the last four quarters, driven by four remarkable consecutive beats.
Applied Industrial Technologies managed to beat estimates thrice over the trailing four quarters and has a positive earnings surprise of 6.2%.
With three beats over the trailing four quarters, Donaldson has a positive average earnings surprise of 5.9%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>