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MasTec (MTZ) to Report Q4 Earnings: What's in the Cards?

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MasTec, Inc. (MTZ - Free Report) is scheduled to report fourth-quarter 2018 results on Feb 28. In the last reported quarter, the company’s earnings came in at $1.33 per share, beating the Zacks Consensus Estimate of $1.23 by 18.1%. However, revenues of $1,977.2 million missed the consensus estimate of $1,983 million by 0.3%. Nevertheless, the stock outpaced the Zacks Consensus Estimate on earnings in all the trailing four quarters, with average of 23.8%.

The company’s third-quarter earnings marked an increase of 62.2% from prior-year figure of 82 cents owing to lower cost of revenues. The top line also increased 1.1% year over year, primarily owing to an uptick in majority of its segments.

How are Estimates Faring?

Let’s take a look at the estimate revision trend in order to get a clear picture of what analysts are thinking about the company prior to the earnings release. For the quarter to be reported, the Zacks Consensus Estimate is currently pegged at $1.06, remaining unchanged over the past 30 days. Notably, this reflects an increase of 125.5% from the year-ago earnings of 47 cents per share. Revenues are expected to be $1.92 million, up 19.9% year over year.

 

MasTec, Inc. Price and EPS Surprise

Factors at Play

MasTec’s fourth-quarter results are expected to gain from major expansion in 5G and FirstNet, fiber extension, along with strong pipeline business in the Oil & Gas segment (accounting for 52.4% of the total revenues). Although temporary stop work order for the MVP project may impact its Oil & Gas revenues, potential offsets are possible through Permian activity.

The Transmission and Power Generation business will continue to benefit from backlog growth. Also, the pipeline business is poised to benefit from a large multi-year cycle of substantial project buildouts. Moreover, the Communications segment (accounting for 35.5% of the company’s total revenues) will benefit from fiber deployments, FirstNet and the beginning of 5G rollouts.

As of Sep 30, 2018, the company achieved a record 18-month backlog of $7.8 billion, reflecting an increase of 56.2% from the end of the prior-year quarter. This marks the fourth consecutive quarter of record total backlog, depicting significantly strong growth in 2019 and beyond.

That said, the company expects to witness ramp-up costs in the Communications segment, related to wireless and wireline fiber initiatives, as the company is on track to achieve 2019 project activity growth.

For the fourth quarter, the company expects revenues of roughly $1.9 billion. Adjusted EBITDA is expected at $194 million, with adjusted earnings projected at around $1.05 per share.

Quantitative Model Prediction

Our proven model does not show that MasTec is likely to beat earnings estimates in the to-be-reported quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can see the complete list of today’s Zacks #1 Rank stocks here.

You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The company has an Earnings ESP of 0.00% and a Zacks Rank #3, which does not make us confident of an earnings beat in the to-be-reported quarter. It is to be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Peer Releases

EMCOR Group Inc. (EME - Free Report) reported fourth-quarter 2018 results, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate. In fact, this quarter marked the eighth consecutive earnings beat for the company.

Fluor Corporation’s (FLR - Free Report) fourth-quarter 2018 earnings surpassed the Zacks Consensus Estimate by 26.2% and increased 10% from the year-ago level.

Quanta Services Inc. (PWR - Free Report) ended 2018 on an impressive note, backed by strong base business activity. The company reported fourth-quarter 2018 adjusted earnings of 96 cents per share, surpassing the Zacks Consensus Estimate of 91 cents by 5.5%.

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