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Quanta Services Completes Buyout of Northwest Lineman College

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Quanta Services, Inc. (PWR - Free Report) recently announced that it has successfully acquired Northwest Lineman College (NLC), a dominant educational and training organization, in January 2018. 

Based in Boise, Idaho, Northwest Lineman College serves the electric power industry. Hence, this latest deal will allow Quanta Services to offer training services across the entire lifespan of a line worker's career. However, the terms of the acquisition were kept under wraps.

Acquisition Rationale

Quanta Services expects its end markets to continue to experience historic levels of capital and operating investments, thus increasing the demand for skilled labor. This acquisition will enable the company to meet the training and recruiting demands for its workforce. In addition, NLC’s ongoing development of natural gas distribution and communications curriculum will benefit Quanta Services as well as its customers. Furthermore, the application of NLC's educational models in all of the company’s service lines is expected to facilitate the development of extra curricula over time.

Expansion Plans

Quanta Services intends to pursue growth and develop incremental backlog through acquisition of companies or assets to improve its service offerings. In this context, one of the notable acquisitions made by the company in recent times is Stronghold — a specialized services company. Going forward, Stronghold is expected to provide Quanta Services access to a greater portion of the industry’s operating and capital spends. This apart, in 2016, the company completed five acquisitions, four of which were integrated in its Electric Power Infrastructure Services segment and one in the Oil and Gas segment.

Our Take

Quanta Services is experiencing solid prospects in its Electric Power segment. Also, the company’s communications infrastructure services business is performing brilliantly. The company’s oil and gas segment outlook looks promising too, primarily owing to the 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.

Moreover, Quanta Services’ growing engineering and project management services are anticipated to be among its key growth drivers. Additionally, the company expects a strong rebound in its end markets as it enters a renewed multiyear up-cycle for businesses.

We note that Quanta Services’ optimism stems from healthy backlog levels, which are expected to grow further. Also, large high-voltage electric transmission project opportunities with numerous utilities and merchant transmission companies in North America bode well for long-term growth. In the past three months, this Zacks Rank #2 (Buy) company has lost 0.6% significantly lower than the industry’s decline of 8.6%.

Other Stocks to Consider

Some other stocks worth considering from the same spaceinclude Century Communities, Inc. (CCS - Free Report) , Louisiana-Pacific Corporation (LPX - Free Report) and Jacobs Engineering Group Inc. . While Century Communities and Louisiana-Pacific sport a Zacks Rank #1 (Strong Buy), Jacobs Engineering Group carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Century Communities has surpassed estimates thrice in the trailing four quarters, with an average positive earnings surprise of 41.3%.

Louisiana-Pacific has outpaced estimates twice in the preceding four quarters, with an average earnings surprise of 5.2%.

Jacobs Engineering Group has surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 11.4%.

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