Back to top

MasTec's (MTZ) Strong Backlog to Boost Long-Term Growth

Read MoreHide Full Article

MasTec, Inc. (MTZ - Free Report) is riding high on project awards across multiple segments, strategic acquisitions, along with robust performance of the Power Generation and Industrial segment. Moreover, the company’s strength in backlog, along with strong pipeline business in the Oil & Gas segment bode well for its future prospects.

Catalysts Driving Growth

A significant number of contract wins is a major growth driver for MasTec. As of Sep 30, 2018, the company achieved a record 18-month backlog of $7.8 billion, up 56.2% from a year ago. This marks its fourth consecutive quarter of record total backlog. On the basis on this, the company projects 2018 annual revenues to be at a record level of $6.9 billion.

Additionally, strong project pipeline is driving the company’s top line in the Power Generation and Industrial segment. Hence, the segment’s revenues, margins and backlog are all projected to grow, specifically large industry awards are expected to increase, leading to a much-improved environment in 2018 and beyond.

Notably, it increased its 2018 adjusted EBITDA and EPS expectation to $719 million and $3.76 million, respectively, from prior expectation of $708 million and $3.67 million. The recently passed Tax Cuts and Jobs Act also added to the positives. The company is likely to experience a greater cash tax benefit going forward, due to the acceleration of tax deductions on capital expenditures.

Moreover, acquisitions are highly accretive to MasTec. The company completed three acquisitions in 2017. Also, it acquired a leasing company of Oil & Gas specialty pipeline equipment. This will provide it with a competitive advantage during the current multi-year cycle of significant Oil & Gas pipeline project activity, which is anticipated to continue at record levels.

Also, the wireless and wireline business has a significant potential, given the fact that substantial investments are expected in wireless infrastructure related to the densification associated with 5G deployment. Also, AT&T won a contract from FirstNet, which is a nationwide public safety wireless network. Both 5G and FirstNet will be catalysts for MasTec’s revenues. Fiber expansion continues to be growth driver in its wireline markets.

MasTec, which shares space in the Zacks Building Products - Heavy Construction industry with EMCOR Group, Inc. (EME - Free Report) , Dycom Industries, Inc. (DY - Free Report) and North American Construction Group Ltd. (NOA - Free Report) , recorded strong third-quarter earnings and revenues. Despite facing regulatory and hurricane flooding disruptions, the company posted 62.2% higher adjusted earnings on a year-over-year basis along with 1.1% growth in revenues. Moreover, adjusted EBITDA margin surged 220 basis points from a year ago.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>



More from Zacks Analyst Blog

You May Like