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MasTec (MTZ) Gears Up for Q3 Earnings: What's in the Cards?

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MasTec, Inc. (MTZ - Free Report) is scheduled to report third-quarter 2019 results on Oct 31, after the closing bell.

In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 42.9% and 7.2%, respectively. Moreover, on a year-over-year basis, earnings and revenues of this leading infrastructure construction company grew 54% and 19.9%, respectively, mainly attributable to higher contributions from Power Generation and Industrial, Electrical Transmission, as well as Oil and Gas businesses.

Markedly, MasTec reported better-than-expected earnings in all the last four quarters, with the average surprise being 21.7%.

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 for earnings per share has decreased from $1.64 to $1.63 over the past seven days. Nonetheless, the estimated figure indicates an increase of 22.6% from $1.33 per share reported in the year-ago quarter. Revenues are expected to be $2.13 billion, suggesting a 7.7% increase from the year-ago reported figure of $$1.98 billion.

MasTec, Inc. Price and EPS Surprise

MasTec, Inc. Price and EPS Surprise

MasTec, Inc. price-eps-surprise | MasTec, Inc. Quote

Factors to Consider

MasTec’s third-quarter results are expected to reflect solid contributions from Power Generation and Industrial, Electrical Transmission, as well as Oil and Gas businesses.

Driven by the backlog generated from the combination of increased renewable project activity and expansion of services into biomass and other smaller production facilities, the Power Generation & Industrial segment is expected to have recorded sizable growth in the third quarter.

Again, major expansion in 5G, fiber extension, and increased demand for tower, small cell and fibre deployments are likely to have boosted the Communication segment’s performance.

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) — has been strongly focusing on its acquisition strategy. This is likely to have continued in the third quarter. Notably, during the first six months of 2019, it completed three acquisitions, one under the Oil and Gas segment and two within the Communications segment. The company’s revenues are expected to have benefited from these buyouts.

Overall, backed by solid contributions from its strong backlog, business segments and recent acquisitions, MasTec expects third-quarter revenues to be $2.15 billion, implying an improvement from $1.98 billion reported in the year-ago period.

Meanwhile, the company expects adjusted EBITDA to be approximately $246 million, indicating 8.7% year-over-year growth, and adjusted EBITDA margin to remain flat.

Also, the company expects adjusted earnings to be $1.62 per share (indicating 21.8% growth from $1.33 reported in the year-ago period).

Segment Discussion

Segment wise, the Zacks Consensus Estimate for Oil and Gas revenues — accounting for 48.3% of total revenues — of $1,049 million indicates an increase of 1.3% year over year and 12% sequentially.

Meanwhile, the consensus estimate for third-quarter revenues for the Communications segment — accounting for 33.6% of the company’s total revenues — is pegged at $725 million, indicating growth of 9.5% from $662 million in the year-ago period and 11% from $653 million in the second quarter.

Revenues from the Power Generation and Industrial segment are expected to grow 46.1% to $263 million from $180 million in the year-ago quarter and 5.2% from $250 million in the second quarter. The Electrical Transmission segment (5.2% of revenues) is expected to generate $104 million of revenues in the third quarter, indicating 5.1% year-over-year growth and 0.04% sequentially.

What Our Model Indicates

Our proven model predicts an earnings beat for MasTec this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Currently, it has a Zacks Rank #2 and an Earnings ESP of +0.20%. You can see the complete list of today’s Zacks #1 Rank stocks here.

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