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Why Is MasTec (MTZ) Down 5.3% Since Last Earnings Report?

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It has been about a month since the last earnings report for MasTec (MTZ - Free Report) . Shares have lost about 5.3% in that time frame, underperforming the S&P 500.

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

MasTec (MTZ - Free Report) Q1 Earnings Top Estimates, View Up

MasTec, Inc. reported adjusted earnings of 58 cents per share, surpassing the Zacks Consensus Estimate of 43 cents by an impressive 34.9%. Also, the reported figure exceeded the company’s expectation by 15 cents and increased by an impressive 65.7% from the prior-year figure of 35 cents.

Revenues of $1,518.3 million topped the consensus mark of $1,431 million. The reported figure increased 8.7% on a year-over-year basis, primarily driven by higher contribution from Power Generation and Industrial, as well as Oil and Gas businesses.

The company’s 18-month backlog as of Mar 31, 2019 was a record $8 billion, up $310 million sequentially and $449 million year over year.

Segment Update

Revenues at Communications declined 2.3% year over year to $612.8 million. Adjusted EBITDA margin also contracted 570 basis points (bps) to 7.4%.

Electrical Transmission segment’s revenues came in at $94.9 million, down 16.8% from the year-ago quarter. Adjusted EBITDA margin remained flat with the prior-year figure at 4%.

Nevertheless, Power Generation and Industrial’s revenues surged 61.5% year over year to $189.4 million. However, adjusted EBITDA margin fell 240 bps from the prior-year quarter to 1.7%.

Revenues at the Oil and Gas segment increased 15.8% from a year ago to $621.3 million. In addition, adjusted EBITDA margin improved an impressive 1110 bps to 17.3%.

Operational Update

General and administrative expenses rose 14.1% to $72.6 million. The company’s adjusted EBITDA came in at $140.1 million in the reported quarter compared with $107.8 million in the prior-year period. Adjusted EBITDA margin also surged 150 bps to 9.2%.

Financial Details

MasTec reported cash and cash equivalents of $43.2 million as of Mar 31, 2019 compared with $27.4 million at 2018-end. Long-term debt was $1.54 billion as of Mar 31, 2019 compared with $1.32 billion on Dec 31, 2018.

The company used $46.8 million of cash from operating activities in the quarter compared with $83.5 million cash provided by operating activities in the year-ago period.

2019 Guidance Lifted

Full-Year 2019

MasTec maintained its revenue expectation of roughly $7.6 billion. Adjusted EBITDA is now projected at $795 million versus $780 million expected earlier, with adjusted EBITDA margin of 10.5%. Adjusted earnings per share are now anticipated at around $4.55 versus $4.34 expected earlier.

Second-Quarter 2019

For the quarter, MasTec expects revenues to be $1.8 billion. Adjusted EBITDA is expected at $200 million. Adjusted earnings per share are anticipated at $1.11.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 26.77% due to these changes.

VGM Scores

At this time, MasTec has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise MasTec has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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