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Why Is MasTec (MTZ) Down 10.7% Since its Last Earnings Report?
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It has been about a month since the last earnings report for MasTec, Inc. (MTZ - Free Report) . Shares have lost about 10.7% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is MTZ due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
MasTec Q4 Earnings Top, Guides Record '18 Results
MasTec delivered fourth-quarter 2017 adjusted earnings per share of 47 cents, beating the Zacks Consensus Estimate of 37 cents. The company had guided adjusted earnings per share of 36 cents for the quarter. However, earnings declined 33% from the 70 cents per share reported in the prior-year quarter.
Including one-time items, MasTec reported earnings of $1.95 per share compared with 66 cents per share reported in the prior-year quarter. Earnings in the fourth quarter included an after-tax benefit of $1.46 per share related to the impact of re-measurement of the company's U.S. deferred income tax balances because of the Tax Cuts and Jobs Act enacted in December 2017.
Operational Update
MasTec’s net sales climbed 19% year over year to $1.6 billion in the quarter, outpacing the Zacks Consensus Estimate of $1.3 billion. Earnings improved across all segments. The Oil and Gas segment’s revenues in the reported quarter surged 30% to $740 million over the fourth-quarter 2016 level.
Revenues at the Power Generation and Industrial segment improved 18% year over year to $96 million. The Communication segment’s revenues increased 11% year over year to $662 million. The Electrical Transmission segment’s revenues inched up 1% year over year to $101 million.
MasTec’s 18-month backlog as of Dec 31, 2017 was a record $7.1 billion, a 31% increase compared with the prior-year end. This was propped up by record levels of Oil & Gas, Communications and Power Generation & Industrial segment backlog, as well as a significant sequential increase in Electrical Transmission segment backlog.
Cost of sales in the quarter jumped 27% year over year to $1.42 billion. Gross profit slumped 18% to $181 million from $221 million recorded in the prior-year quarter. Gross margin contracted 520 basis points to 11.3% in the fourth quarter.
General and administrative expenses went up 16% to $50 million. MasTec reported operating profit of $181 million in the quarter, down from $221 million reported in the year-earlier quarter. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) decreased to $128.9 million compared with $154.1 million witnessed in the comparable quarter last year.
Financial Details
MasTec reported cash and cash equivalents of $40.3 million as of Dec 31, 2017, up from $39 million as of Dec 31, 2016. The company recorded cash from operations of $156 million for 2017 compared with $205 million recorded in the prior year. Long-term debt was $1.28 billion as of Dec 31, 2017, compared with $961 million as of Dec 31, 2016.
Fiscal 2017 Performance
Adjusted earnings for 2017 were a record $2.92, a 54% rise over $1.90 in 2016. Earnings beat the Zacks Consensus Estimate of $2.81 and also came ahead of its guidance of $2.80. Including one-time items, the company reported earnings per share of $4.22 compared with $1.61 in 2016.
Net sales increased 29% year over year to a record $6.6 billion as well as its guidance of $6.3 billion and also surpassed the Zacks Consensus Estimate of $6.3 billion.
Guidance
The year 2017 marked the second consecutive year of record financial performance for MasTec. Backed by the record backlog, solid demand, the company expects to deliver another record year in 2018. MasTec is poised to gain from significant amounts of project awards across multiple segments. It believes strong cash flow, solid capital structure and ample liquidity will provide financial flexibility to support significant growth opportunities.
Buoyed by these factors, MasTec projects 2018 annual revenues to be at record levels of $6.75 billion. It expects record adjusted earnings per share of $3.45 which marks an 18% rise over the prior-year levels. Additionally, MasTec estimates adjusted EBITDA to increase 6% to $685 million.
Further, for first-quarter 2018, MasTec guided revenues to be roughly $1.23 billion. The company anticipates adjusted EBITDA of around $90 million and adjusted earnings per share of 20 cents for the quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter. In the past month, the consensus estimate has shifted by 48.7% due to these changes.
At this time, MTZ has a poor Growth Score of F, however its Momentum is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for momentum investors than value investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, MTZ has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is MasTec (MTZ) Down 10.7% Since its Last Earnings Report?
It has been about a month since the last earnings report for MasTec, Inc. (MTZ - Free Report) . Shares have lost about 10.7% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is MTZ due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
MasTec Q4 Earnings Top, Guides Record '18 Results
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter. In the past month, the consensus estimate has shifted by 48.7% due to these changes.
MasTec, Inc. Price and Consensus
MasTec, Inc. Price and Consensus | MasTec, Inc. Quote
VGM Scores
At this time, MTZ has a poor Growth Score of F, however its Momentum is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for momentum investors than value investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, MTZ has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.