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Quanta Services (PWR) Up 5.7% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Quanta Services, Inc. (PWR - Free Report) . Shares have added about 5.7% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is PWR 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.

Quanta Services’ Q1 Earnings & Revenues Beat, View Up

Quanta Services reported first-quarter 2018 adjusted earnings of 40 cents per share, surpassing the Zacks Consensus Estimate of 32 cents and rising 2.6% year over year. The bottom-line growth was driven by record revenues and sound execution of projects.

The company’s GAAP earnings from continuing operations came in at 24 cents, down 22.6% from the prior-year quarter’s 31 cents.

Inside the Headlines

Total revenues in the quarter came in at $2,417.6 million, up 11% on a year-over-year basis. The figure trumped the Zacks Consensus Estimate of $2,061 million. Impressive revenues growth in the Electric Power Infrastructure Services segment acted as the primary catalyst.

Of the total quarterly revenues, the Electric Power Infrastructure segment accounted for 64.9% and the Oil and Gas Infrastructure segment represented 35.1%.

Per segments, revenues from Electric Power Infrastructure maintained impressive momentum and were up 28.6% year over year to $1,568.5 million. However, Oil and Gas Infrastructure segmental revenues declined 11.4% to $849.1 million.

In the reported quarter, operating income came in at $75.2 million compared with the prior-year quarter’s figure of $75.1 million.

At the end of Mar 31, 2018, Quanta Services’ consolidated total backlog amounted to $6,882.8 million.

Liquidity

Quanta Services exited the quarter with cash and cash equivalents of $101.7 million, down from $138.3 million as of Dec 31, 2017. At quarter end, the company’s long-term debt and notes payable was $882.8 million, up from $670.7 million as of Dec 31, 2017.

Notable Developments

During the quarter, the company secured a turnkey engineering and construction services contract with a large telecommunications company for fiber deployment throughout a tier 2 market in Texas. This deployment is designed to support the customer's existing 4G and developing 5G wireless networks along with the delivery of high-speed broadband services.

At the end of the quarter under review, Quanta Services secured a large diameter pipeline project in Oklahoma, which is designed to transport natural gas from the SCOOP and STACK plays to end users in support of LNG export, industrial demand, electric power generation, local distribution companies and downstream users.

In the reported quarter, Quanta Services repurchased 5 million shares of common stock worth $173.9 million. The company has now acquired 6.4 million shares under its current $300-million stock repurchase program.

Guidance

Concurrent with the earnings release, the company raised its revenues and earnings guidance for fiscal 2018, to incorporate the impressive operating performance so far in 2018. Adjusted earnings per share are projected in the band of $2.55 to $2.95 per share, compared with the previous range of $2.40-$2.80 per share.

Sales are expected in the range of $9.95-$10.55 billion compared with the previous range of $9.75-$10.25 billion. Estimated net income lies in the band of $321-$383 million, while EBITDA is expected in the range of $756.5-$858.1 million.

How Have Estimates Been Moving Since Then?

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

Quanta Services, Inc. Price and Consensus

 

VGM Scores

At this time, PWR has a poor Growth Score of F, however its Momentum is doing a lot better with a C. The stock was allocated a grade of B on the value side, putting it in the second quintile 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 value investors than momentum investors.

Outlook

PWR has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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