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Can Quanta's Electric Business Drive Further Margin Expansion?
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Key Takeaways
Quanta's Electric revenues rose 43.6%, while operating income jumped 62.5% in the second quarter.
Electric margins expanded 140 basis points to 11.5%, helped by resource utilization and work mix.
PWR expects further margin gains as transmission work and utilization increase in the back half.
Quanta Services Inc. (PWR - Free Report) is seeing improving profitability in its Electric business, supported by better resource utilization and changes in the mix of work. With Electric accounting for the majority of the company’s revenues, further margin improvement remains an important factor for overall operating performance. Large transmission projects, workforce development and higher utilization are key areas shaping the segment’s margin profile.
In the second quarter, Electric revenues increased 43.6% year over year to $7.84 billion, while operating income rose 62.5% to $898.2 million. The faster growth in operating income than revenues lifted the segment’s operating margin year over year to 11.5% from 10.1%, a 140-basis-point expansion.
The company sees additional room for margin improvement as the work mix evolves. The Electric segment has the ability to operate at 10% to 12% margins on the utility side, with the upper end reached when large transmission work and other activities are combined at full utilization. This places greater emphasis on project mix and resource utilization in determining the segment’s margin trajectory.
Workforce development remains another important part of this equation. The company added about 15,500 employees over the past year, including a significant number of organic additions. Improving training and moving workers into the field more efficiently supports better utilization and scale across the Electric business.
Large transmission work also remains an important part of the margin opportunity. As transmission activity becomes a larger part of the Electric mix and utilization improves, the segment has room to build on its recent margin gains. The company expects further margin improvement in the back half, keeping work mix, utilization and execution central to the margin outlook.
Quanta vs. EMCOR & MasTec: How Do Margin Drivers Compare?
Quanta’s Electric business is seeing margin expansion from stronger execution, higher utilization and a favorable mix of large transmission work. Peers like EMCOR Group, Inc. (EME - Free Report) and MasTec, Inc. (MTZ - Free Report) are also benefiting from improving project execution and business mix, although the specific drivers differ.
EMCOR’s Electrical Construction segment delivered 210 basis points of operating margin expansion, with most of the improvement coming from higher gross profit margins driven by strong field execution and a more favorable project mix. MasTec’s Power Delivery business also recorded 120 basis points of EBITDA margin expansion, with it expecting further quarterly improvement as execution and project activity progress.
Against this backdrop, Quanta’s Electric business has room to build on its recent margin gains through greater utilization and a higher contribution from large transmission work. The company sees the utility side operating within a 10% to 12% margin range, with the upper end associated with full utilization and a broader mix of transmission work.
PWR stock is currently trading at a premium compared with the industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 37.03, as evidenced by the chart below.
Image Source: Zacks Investment Research
Earnings Estimate Revision of PWR
PWR’s earnings estimates for 2026 and 2027 are pinned at $16.70 and $19.41 per share, respectively, reflecting an upward trend over the past 30 days. The revised estimates for 2026 and 2027 imply year-over-year growth of 55.4% and 16.2%, respectively.
View the Zacks #1 Rank List
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Can Quanta's Electric Business Drive Further Margin Expansion?
Key Takeaways
Quanta Services Inc. (PWR - Free Report) is seeing improving profitability in its Electric business, supported by better resource utilization and changes in the mix of work. With Electric accounting for the majority of the company’s revenues, further margin improvement remains an important factor for overall operating performance. Large transmission projects, workforce development and higher utilization are key areas shaping the segment’s margin profile.
In the second quarter, Electric revenues increased 43.6% year over year to $7.84 billion, while operating income rose 62.5% to $898.2 million. The faster growth in operating income than revenues lifted the segment’s operating margin year over year to 11.5% from 10.1%, a 140-basis-point expansion.
The company sees additional room for margin improvement as the work mix evolves. The Electric segment has the ability to operate at 10% to 12% margins on the utility side, with the upper end reached when large transmission work and other activities are combined at full utilization. This places greater emphasis on project mix and resource utilization in determining the segment’s margin trajectory.
Workforce development remains another important part of this equation. The company added about 15,500 employees over the past year, including a significant number of organic additions. Improving training and moving workers into the field more efficiently supports better utilization and scale across the Electric business.
Large transmission work also remains an important part of the margin opportunity. As transmission activity becomes a larger part of the Electric mix and utilization improves, the segment has room to build on its recent margin gains. The company expects further margin improvement in the back half, keeping work mix, utilization and execution central to the margin outlook.
Quanta vs. EMCOR & MasTec: How Do Margin Drivers Compare?
Quanta’s Electric business is seeing margin expansion from stronger execution, higher utilization and a favorable mix of large transmission work. Peers like EMCOR Group, Inc. (EME - Free Report) and MasTec, Inc. (MTZ - Free Report) are also benefiting from improving project execution and business mix, although the specific drivers differ.
EMCOR’s Electrical Construction segment delivered 210 basis points of operating margin expansion, with most of the improvement coming from higher gross profit margins driven by strong field execution and a more favorable project mix. MasTec’s Power Delivery business also recorded 120 basis points of EBITDA margin expansion, with it expecting further quarterly improvement as execution and project activity progress.
Against this backdrop, Quanta’s Electric business has room to build on its recent margin gains through greater utilization and a higher contribution from large transmission work. The company sees the utility side operating within a 10% to 12% margin range, with the upper end associated with full utilization and a broader mix of transmission work.
PWR Stock’s Price Performance & Valuation Trend
PWR stock has gained 52.5% year to date, outperforming the Zacks Engineering - R and D Services industry, the Zacks Construction sector and the S&P 500 index.
Image Source: Zacks Investment Research
PWR stock is currently trading at a premium compared with the industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 37.03, as evidenced by the chart below.
Image Source: Zacks Investment Research
Earnings Estimate Revision of PWR
PWR’s earnings estimates for 2026 and 2027 are pinned at $16.70 and $19.41 per share, respectively, reflecting an upward trend over the past 30 days. The revised estimates for 2026 and 2027 imply year-over-year growth of 55.4% and 16.2%, respectively.
Image Source: Zacks Investment Research
Quanta currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.