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Why You Should Add MasTec (MTZ) Stock to Your Portfolio


MasTec Inc. MTZ stock looks promising at the moment. The company currently sports a Zacks Rank #1 (Strong Buy) and is leading infrastructure construction company operating throughout the U.S. The company engages in the building, installation, maintenance and upgrade of energy, communication and utility infrastructure.

We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.

In the last one year, MasTec has significantly outperformed the industry with respect to price performance. The stock gained around 43.3%, while the industry rose a meager 4%.

Let’s delve deeper into the factors that make MasTec an attractive investment option.

What’s Working in Favor of MasTec?

Solid Q2: MasTec reported record second-quarter 2017 adjusted earnings per share of 99 cents, comfortably beating the Zacks Consensus Estimate of 62 cents by a wide margin of 60%. The better-than-expected performance was particularly led by record levels of Oil & Gas project activity.

Upbeat Guidance: Backed by its performance in 2017 so far, MasTec raised its 2017 guidance to new record levels. The company currently estimates 2017 annual revenue of approximately $6 billion, up from the prior guidance of $5.7 billion. The company now guides adjusted earnings per share of $2.73, up from the prior guidance of $2.45 for the full year. This marks a 29% increase over 2016. Additionally, MasTec estimates adjusted EBITDA to jump 30% to $620 million, up from the prior projection of $575 million.

Impressive Surprise History: MasTec has outpaced the Zacks Consensus Estimate in the trailing four quarters. The company has an average positive earnings surprise of 32.81%.

Cheaper Valuation: MasTec’s trailing 12-month price earnings (P/E) ratio is 14.32, while the industry's average trailing 12-month P/E ratio is at 15.57. Consequently, the stock is cheaper at this point.

Estimates Moving Up: Annual estimates for MasTec have moved north in the past seven days, reflecting analysts’ confidence on the stock following its upbeat Q2 results. Over this period, the Zacks Consensus Estimate for 2017 has increased by around 13% to $2.59 per share. The Zacks Consensus Estimate for 2018 has also moved up 5% to $2.58.

Superior Return on Equity (ROE): MasTec’s ROE of 21.8%, as compared with the industry average of 14.6%, reflects the company’s efficiency in utilizing shareholder’s funds.

Healthy Growth Prospects: The stock also has a long-term (3-5 years) expected earnings per share (EPS) growth rate of roughly 14%.

Growth Drivers: The company’s recent geographic expansion of heavy civil operations, as well as entry into the water, sewer and drainage systems infrastructure market operations will provide opportunity to capitalize on the increasing demand trends in this market. In its wireline and wireless communication markets, significant expansion related to both 5G and fiber deployment will benefit communications business.

Other Stocks to Consider

Some other top-ranked stocks worth considering in the same sector include Owens Corning OC, TopBuild Corp. BLD and Patrick Industries, Inc. PATK. Owens Corning and TopBuild sport the same rank as MasTec while Patrick Industries carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Owens Corning has an average positive earnings surprise of 20.17%.

TopBuild has an average positive earnings surprise of 10.42%.

Patrick Industries has an average positive earnings surprise of 20.29%.

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