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Quanta Services (PWR) Q3 Earnings, Revenues Top Estimates

Quanta Services Inc. PWR reported third-quarter 2017 adjusted earnings of 63 cents per share, surpassing the Zacks Consensus Estimate of 59 cents by 6.8%.

The company’s GAAP earnings from continuing operations came in at 56 cents, up 19.1% from the prior-year quarter’s 47 cents. The bottom-line growth is attributable to a robust top-line and sound execution of projects.

Inside the Headlines

Total revenues in the quarter came in at $2,609 million, up an impressive 27.8% on a year-over-year basis. Additionally, the figure trumped the Zacks Consensus Estimate of $2,305 million. Robust revenues generation at the Oil and Gas Infrastructure as well as Electric Power Infrastructure Services segments acted as the primary catalyst.

Of the total quarterly revenues, the Electric Power Infrastructure segment accounted for 57.7%, and the Oil and Gas Infrastructure segment represented 42.3%.

Quanta Services, Inc. Price, Consensus and EPS Surprise

Quanta Services, Inc. Price, Consensus and EPS Surprise | Quanta Services, Inc. Quote

Segment wise, revenues from Electric Power Infrastructure were up 23.1% year over year to $1,504.8 million. Oil and Gas Infrastructure segmental revenues surgeda whopping 34.7% to $1,104.6 million.

In third-quarter 2017, operating income came in at $140.4 million, compared with the prior-year figure of $130.2 million.

At the end of Sep 30, 2017, Quanta Services’ consolidated total backlog was reported to be $6,190.6 million.

Liquidity

Quanta Services exited the quarter with cash and cash equivalents of $91.5 million, down from $112.2 million as of Dec 31, 2016. At quarter end, the company’s long-term debt and notes payable was $760.2 million, up from $353.6 million as of Dec 31, 2016.

Notable Developments

By the end of the quarter, Quanta Services managed to clinch more than $200 million of new contracts for several major North American communications companies. The company is to perform majority of the work in the United States. Itsscope of work on these projects includes fiber backhaul, fiber-to-the-home deployments as well as long-haul fiber installations.

Guidance

Concurrent with third-quarter 2017 results, the company revised full-year top and bottom-line guidance. Quanta Services now expects revenues to lie in the range of $9.25-$9.35 billion compared with the previously guided range of $8.65-$9.05. Additionally, the company tweaked full-year adjusted earnings per share guidance from $$1.92-$2.10 to $1.90-$2.00.

Our Take

Quanta Services reported better-than-expected third-quarter results on the back of solid top-line growth. The companyremains confident about the prospects of its end markets in both of its segments, namely, Electric Power and Oil & Gas segments, over the next two years. Quanta Services’ optimism stems from healthy backlog levels which are expected to grow further.

Going forward, the company continues to expect healthy levels of base load work including supporting midstream infrastructure, downstream support services and natural gas distribution. In the past two years, state-of-the-art infrastructure solutions offered by the company has helped it garner approximately $2 billion of project revenues across core competencies in electric power, oil and gas and telecom in all end markets including Canada, the United Statesand Latin America.

Quanta Services currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks worth considering in the same space include Thor Industries, Inc. THO, EMCOR Group, Inc. EME and KB Home KBH. While Thor Industries sports a Zacks Rank #1 (Strong Buy), EMCOR Group and KB Home carryZacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Thor Industries has an impressive earnings surprise history, surpassing estimates thrice in the trailing four quarters with an average beat of 11.9%.

EMCOR Group has an impressive earnings surprise history, exceeding estimates thrice in the trailing four quarters with an average beat of 17%.

KB Home has an excellant earnings surprise history, exceeding estimates in the trailing four quarters with an average beat of 12.7%.

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