On Nov 9, we issued an updated research report on MasTec, Inc. (MTZ - Free Report) . Following a record performance so far this year, the infrastructure construction company has hiked its full-year 2017 outlook. It anticipates to benefit from the recent diverse large projects wins, solid prospects in both wireless and wireline businesses as well as the latest acquisitions.
Let’s illustrate these growth factors in detail.
Increase in Guidance
MasTec expects revenues will be at record levels of $6.3 billion for 2017, 24% higher than the previous year. It projects adjusted earnings per share of $2.80 for the full year, a 47% increase year over year. Annual adjusted EBITDA also expects to grow 32% year over year to be around $630 million.
Large Projects Wins to Aid Backlog
Since the end of the third quarter, MasTec has been awarded several large projects across multiple segments. This includes a large pipeline project with an estimated contract value of more than $1.5 billion, fiber awards with an anticipated contract value of nearly $1 billion and wind farm projects with projected contract values exceeding $350 million. The company noted that there are possibilities of future wins and consequently expects year-end backlog to be at record levels, exceeding $6 billion.
Acquisitions to Drive Revenues
So far, in 2017, MasTec has completed three acquisitions. The company acquired SEFNCO Communications, Inc. — a telecommunications service provider — in April. This will expand MasTec’s geographic and customer capacity in the wireline/fiber deployment market. Further, it acquired Texas-based infrastructure construction company — Cash Construction — in the second quarter that will provide exposure to the growing water market.
In addition to the above, the company recently acquired a leasing company of Oil & Gas specialty pipeline equipment. This buyout is anticipated to help prune overall equipment costs as well as provide a competitive advantage during the current multi-year cycle of significant Oil & Gas pipeline project activity. Furthermore, the geographic expansion of heavy civil operations, and entry into the water, sewer and drainage systems infrastructure market operations will open up opportunities to capitalize on the increasing demand trends in this market.
Wireless & Wireline Businesses to Propel Growth
MasTec’s wireless business has significant potential given that substantial investments are expected in wireless infrastructure related to the densification associated with 5G deployment. Every major carrier has publicly announced plans and initiatives for 5G. Also, AT&T Inc. (T - Free Report) was awarded FirstNet — a nationwide public safety wireless network. Currently, 28 states are availing the network’s services. Both 5G and FirstNet will help bolster 2018 revenues and provide a significant boost in 2019 as well.
In its wireline markets, fiber expansion continues to be a growth driver and the company projects strong nationwide fiber-deployment projects from telephone and cable TV companies which will provide it with significant opportunities over the coming years. Lately, MasTec received fiber projects awards worth $1 billion.
Share Price Performance
In the last year, MasTec has outperformed its industry with respect to price performance. The stock has gained around 24%, while the industry has recorded growth of 4.5% during the same time frame.
Zacks Rank & Other Key Picks
MasTec currently flaunts a Zacks Rank #1 (Strong Buy).
Other similarly-ranked stocks in the same space include Boise Cascade Company (BCC - Free Report) and EMCOR Group, Inc. (EME - Free Report) . You can see the complete list of today’s Zacks #1 Rank stocks here.
Boise Cascade has an expected long-term growth rate of 18.5%.
EMCOR has an expected long-term growth rate of 15%.
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