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MasTec (MTZ) Hits 52-Week High on Upbeat View & Project Wins


Shares of MasTec, Inc. MTZ crafted a 52-week high of $51.70 during intra-day trading, finally closing lower at $51.60.

The company has a market cap of $4.3 billion. Over the last three months, its average volume of shares traded has been approximately 1.06M. Also, MasTec surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average positive earnings surprise being 28.05%.

Price Performance

Notably, the stock has rallied 43.4% in a year’s time, higher than the S&P 500’s gain of 21.2%. Also, MasTec has outperformed 10% growth recorded by the industry during the same time frame.

Investors are optimistic on this Zacks Rank #3 (Hold) company, backed by MasTec’s improved guidance for full-year 2017, large project wins and acquisitions.

In addition, MasTec has an impressive VGM Score of B. In this, V stands for Value, G for Growth and M for Momentum, and the score is a weighted combination of these three scores. Such a score eliminates the negative aspects of stocks and selects winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score.

Our research shows that stocks with Style Scores of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3, offer the best investment opportunities.

What Led to the 52-week High?

MasTec’s shares have been on an uptrend, rallying 14.8%, since the company reported third-quarter results in November 2017.

MasTec, Inc. Price and Consensus

MasTec, Inc. Price and Consensus | MasTec, Inc. Quote

MasTec’s raised guidance for 2017 has also fueled this share-price appreciation. The company projected revenues at record levels of $6.3 billion for 2017 — 24% higher than the previous year. Annual adjusted EBITDA will climb 32% year over year, to be around $630 million. Adjusted earnings per share is projected at $2.80, a 47% jump over the $1.90 reported in 2016.

Notably, MasTec has been awarded a number of large projects across multiple segments since the end of the last reported quarter. This includes a large pipeline project with an expected contract value of more than $1.5 billion, fiber awards with an anticipated contract value more than $1 billion and wind farm projects with expected contract values exceeding $350 million. The company noted that there are possibilities of future wins and consequently expects year-end backlog to be at record levels, exceeding $6 billion.

Additionally, the company has won two biomass projects of $250 million of contract value, transmission projects with one particular customer exceeding $250 million of contract value and an electric distribution agreement with a utility that will help its electric distribution business. The company noted that there are possibilities of future wins and consequently anticipates year-end backlog to be at record levels, exceeding $6 billion.

MasTec’s wireless business has significant potential given that substantial investments are expected in wireless infrastructure related to the densification associated with 5G deployment. In its wireline markets, fiber expansion continues to be a growth driver and the company projects strong nationwide fiber-deployment projects from telephone and cable TV companies which will provide it with significant opportunities over the coming years.

In 2017, MasTec completed three acquisitions. In April 2017, the company acquired SEFNCO Communications to expand its capacity in the wireline/fiber deployment market. This will also considerably boost the company’s wireline-construction abilities in a geography where its customer exposure was limited.

In the second quarter, MasTec acquired Cash Construction which will provide exposure to the growing water market. It also acquired a leasing company of Oil & Gas specialty pipeline equipment which will provide a competitive advantage during the current multi-year cycle of significant Oil & Gas pipeline project activity.

Upward Estimate Revisions

MasTec’s positive estimate revisions reflect optimism in the company’s potential, as earnings growth is often an indication of robust prospects (and stock price gains). Estimates for the company moved up over the past 90 days, reflecting analysts’ bullish sentiments. The earnings estimate for 2017 has gone up 2.6%, while that of 2018 inched up 1.7%.

The above-mentioned tailwinds have raised investors’ optimism on the stock and are anticipated to boost the company’s share price in the days ahead.

Stocks to Consider

Some better-ranked stocks in the same space include D.R. Horton, Inc. DHI, Granite Construction Incorporated GVA and CalAtlantic Group, Inc. CAA. While D.R. Horton and CalAtlantic Group sport a Zacks Rank #1, Granite Construction carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

D.R. Horton has a long-term earnings growth rate of 10%. Its shares have appreciated 42.6%, over the past six months.

CalAtlantic Group has a long-term earnings growth rate of 8.5%. The stock has rallied 68.8% in six months’ time.

Granite Construction has a long-term earnings growth rate of 7%. The company’s shares have been up 32.8% during the same time frame.

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