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MasTec (MTZ) Up 4.9% Since Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for MasTec, Inc. (MTZ - Free Report) . Shares have added about 4.9% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is MTZ due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

MasTec Q1 Earnings Top, Raises 2018 Guidance

MasTec delivered first-quarter 2018 adjusted earnings per share of 35 cents, beating the Zacks Consensus Estimate of 22 cents. The company had guided adjusted earnings per share of 20 cents for the quarter. However, earnings declined 41% from the 59 cents per share reported in the prior-year quarter.

Including one-time items, MasTec reported earnings of 32 cents per share compared with 50 cents per share reported in the prior-year quarter.

Operational Update

MasTec’s net sales climbed 21% year over year to a record $1.4 billion in the quarter, outpacing the Zacks Consensus Estimate of $1.2 billion. Earnings improved across all segments. Revenues at the Power Generation and Industrial segment soared 152% year over year to $118 million. The Oil and Gas segment’s revenues in the reported quarter improved 18% to $537 million over the first-quarter 2017 level. The Communication segment’s revenues increased 12% year over year to $627 million. The Electrical Transmission segment’s revenues went up 15% year over year to $114 million.

MasTec’s 18-month backlog as of Mar 31, 2018 was a record $7.6 billion, a 33% increase compared with the prior-year quarter end. This was propped up by record levels of Communications, Oil & Gas and Power Generation & Industrial segment backlog.

Cost of sales in the quarter jumped 27% year over year to $1.24 billion. Gross profit slumped 15% to $160 million from $187 million recorded in the prior-year quarter. Gross margin contracted 480 basis points to 11.4% in the first quarter 2018.

General and administrative expenses edged down 2% to $64 million. MasTec reported operating profit of $123 million in the quarter, up 25% from $98 million reported in the year-earlier quarter. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) decreased to $107.8 million compared with $134.8 million witnessed in the comparable quarter last year.

Financial Details

MasTec reported cash and cash equivalents of $40.2 million as of Mar 31, 2018, up from $16 million as of Mar 31, 2017. The company recorded cash from operations of $84 million for first-quarter 2018 compared with $154 million recorded in the prior year quarter. Long-term debt was $1.34 billion as of Mar 31, 2018, compared with $1.28 million as of Dec 31, 2017.

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 $6.9 billion. It expects record adjusted earnings per share of $3.65 which marks a 25% rise over the prior-year levels and higher than the previous guidance of $3.45. Additionally, MasTec estimates adjusted EBITDA to be around $700 million, higher than the previous $685 million.

Further, for second-quarter 2018, MasTec guided revenues to be roughly $1.78 billion. The company anticipates adjusted EBITDA of around $189 million and adjusted earnings per share of $1.03 for the quarter.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. There have been three revisions higher for the current quarter compared to three lower.

MasTec, Inc. Price and Consensus

 

MasTec, Inc. Price and Consensus | MasTec, Inc. Quote

VGM Scores

At this time, MTZ has a subpar Growth Score of D, however its Momentum is doing a bit better with a C. The stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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 value investors than momentum investors.

Outlook

MTZ has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.




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