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What's in Store for Quanta Services (PWR) in Q4 Earnings?

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Quanta Services, Inc. (PWR - Free Report) is slated to release fourth-quarter 2017 results before the opening bell on Feb 22.

Last quarter, the company reported earnings of 63 cents per share, beating the Zacks Consensus Estimate by 6.8%. Overall, Quanta Services has a dismal earnings surprise history, having missed estimates thrice in the trailing four quarters, resulting in an average negative surprise of 2.8%.

Let's see how things are shaping up for this announcement.

Factors at Play

Quanta Services remains confident about the prospects of its end markets in both of its segments — Electric Power and Oil & Gas — over the next two years. The company’s communications infrastructure services business seems to be performing brilliantly. For instance, at third-quarter end, the company managed to clinch more than $200 million of new contracts for several major North American communications companies.

In the Unites States, the company is looking to expand its communications infrastructure as well. In this regard, Quanta Services is pursuing opportunities with various telecom and cable MSO customers.

Moreover, the company’s thriving engineering and project management services are anticipated to be among its key growth drivers going forward. Also, Quanta Services has been witnessing a solid rebound in its end markets fuelled by key growth drivers like an aging grid, shifting generation mix and grid modernization. These factors are expected to prove conducive to the company’s top line in the coming quarters. The stock remains optimistic about its healthy backlog levels that are expected to grow further.

Meanwhile, Quanta Services’ oil and gas segment outlook looks promising on improving mainline and natural gas distribution, and integrity markets. Going forward, the company continues to expect healthy levels of base load work including supporting midstream infrastructure, downstream support services and natural gas distribution. This apart, it is currently pursuing several high-voltage electric transmission award opportunities, which would reflect in the upcoming quarterly results.

Additionally, the company’s Stronghold acquisition is likely to facilitate increased penetration in downstream and midstream petrochemical markets, consequently acting as a key factor influencing growth.

Earnings Whispers

Our proven model does not conclusively show an earnings beat for Quanta Services in the to-be-reported quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. But that is not the case here as you will see below.

Zacks ESP: Quanta Services has an Earnings ESP of -0.32%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #2, which increases the predictive power of the ESP. However, its negative ESP makes surprise prediction difficult.

As it is we caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Boise Cascade, L.L.C. (BCC - Free Report) has an Earnings ESP of +15.79% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Owens Corning Inc (OC - Free Report) has an Earnings ESP of +2.73% and a Zacks Rank #2.

D.R. Horton, Inc. (DHI - Free Report) has an Earnings ESP of +1.04% and a Zacks Rank #2.

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