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Will MasTec (MTZ) Bounce Back Post New Buyback Sanction?


MasTec, Inc.’s MTZ board has approved a new share repurchase program. This will authorize the company to buy back shares up to $150 million. Following the news, the company’s shares inched up 1.2% in after-hour trading session on Sep 11, 2018.

Under this program, the company will make share repurchases from time to time at prevailing market prices through open market and privately negotiated transactions. The timing and amount of share repurchases will depend on share price, market conditions, regulatory and legal requirements, cash flow as well as liquidity requirements and other factors.

MasTec recently announced the completion of its previously authorized $100-million share-repurchase program. So far in 2018, the company repurchased approximately 4.3 million shares or about 5% of its outstanding shares as of the beginning of the year. These initiatives reflect its commitment toward shareholders’ wealth maximization.

The company’s strong liquidity positions it well for growth in the future and enables it to enhance shareholders’ return. MasTec continues to expect 2018 cash flow from operations to reach record levels, exceeding $500 million.

Stock Performance

MasTec has underperformed the industry it belongs to in the past three months. The company’s shares have lost 14.2% compared with the industry’s decline of 10.1%. Project delays and ramp-up costs associated with the Communications segment, stemming from wireless and wireline fiber initiatives in the second half of 2018, are concerns.

Nevertheless, share repurchase program and project awards across multiple segments will provide a cushion to the stock. It projects 2018 annual revenues to be at a record level of $6.9 billion. Revenue growth will primarily be driven by the Communications, Transmission and Power Generation segments. The Power Generation & Industrial segment will project sizable growth, courtesy of the backlog generated from the combination of increased renewable project activity and the expansion of services into biomass as well as other smaller production facilities.

Zacks Rank & Key Picks

MasTec has a Zacks Rank #3 (Hold). A few better-ranked stocks worth considering in the same space are North American Construction Group Ltd. NOA, Primoris Services Corporation PRIM and EMCOR Group, Inc EME. North American Construction and Primoris Services sport a Zacks Rank #1 (Strong Buy), whereas EMCOR Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

North American Construction Group has reported better-than-expected earnings in three out of the trailing four quarters, with an average of 35.4%.

Primoris Services has an impressive long-term earnings growth rate of 10%.

EMCOR Group reported earnings beat in the trailing four quarters, with an average of 24.5%.

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