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MasTec Stock Trading at a Premium to Industry: Should You Buy?
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MasTec, Inc. (MTZ - Free Report) shares are currently trading at a premium to the Zacks Building Products - Heavy Construction industry, with its forward 12-month price-to-earnings (P/E) ratio of 28.95X. The industry is currently trading at 22.47X.
However, its Value Score of B suggests that the stock is moderately valued, indicating a fair balance between price and growth potential. Additionally, the stock holds a strong VGM Score of A, supported by a Growth Score of A and a Momentum Score of B, highlighting its overall performance potential.
The company is also currently trading at a premium compared with similar players like EMCOR Group, Inc. (EME - Free Report) , AECOM (ACM - Free Report) and Fluor Corporation (FLR - Free Report) . EME, ACM and FLR are trading with forward 12-month P/E multiples of 23.84, 20.74 and 18.69, respectively.
MasTec Stock Trading at a Premium
Image Source: Zacks Investment Research
Although the premium valuation may raise some concerns, it underscores the market’s confidence in MTZ's robust financial performance and continued growth potential. The stock has shown impressive growth, soaring 138.4% in the past year and outpacing the 115.2% growth of the industry. This remarkable performance has drawn investor attention. Over the same period, the stock has significantly outperformed the broader Zacks Construction sector’s 19.9% and the S&P 500 index’s 24.8% growth.
The company is benefiting from a diversified business model and strategic acquisitions. Improved project efficiencies and a solid backlog are supporting growth, while solid market demand positions MasTec for continued success across key segments.
MTZ Stock’s Past-Year Price Performance
Image Source: Zacks Investment Research
What Fuels MTZ’s Premium Valuation?
Diversified Business Model: MasTec is positioned for steady growth thanks to its diversified business model and strong market demand. The company benefits from a growing backlog driven by increased customer demand for services in areas such as Clean Energy & Infrastructure, Power Delivery and Communications.
As of Sept. 30, 2024, MasTec reported an 18-month backlog of $13.86 billion, reflecting a 3.9% sequential increase and 11% year-over-year growth. This record backlog provides strong momentum heading into 2025, ensuring visibility into upcoming projects that will drive the company’s performance in the future.
Communications Fueling MasTec’s Growth: MasTec’s Communications segment is growing steadily, driven by strong demand for advanced network infrastructure. In the wireless sector, MasTec is expanding its market share with AT&T while the ongoing Nokia Ericsson swap-out continues on track.
The company is also seeing strong demand in the wireline segment. The impacts of Broadband Equity, Access, and Deployment funding, along with the growing need for fiber driven by artificial intelligence and data centers, are expected to fuel further growth. Additionally, MasTec secured a major fiber program build from Lumen Technologies, spanning over 8,000 miles to improve network infrastructure and connectivity. These efforts reflect the company’s success in leveraging the expansion of digital infrastructure to drive future growth.
Infrastructure Growth Driving MTZ’s Prospects: MasTec remains optimistic about its growth trajectory, driven by favorable macroeconomic trends, operational efficiencies and a strong project mix. The company is well-positioned to benefit from the rise in infrastructure spending, supported by initiatives such as the Infrastructure Investment and Jobs Act and the Inflation Reduction Act.
Increased investments in clean energy, power delivery and water infrastructure align with MasTec’s strategic focus on high-growth sectors, strengthening its position to capture more market opportunities. For 2025, MasTec anticipates continued growth across its key segments, including communications, power delivery and clean energy. The company expects double-digit revenue growth in these areas and improved margins compared to 2024.
MTZ Stock Trading Above 50 & 200-Day SMA
Technical indicators suggest a continued strong performance for MasTec. From the graphical representation given below, it can be observed that the MTZ stock is trading above both the 50-day simple moving average (SMA) and 200-day SMA, signaling a bullish trend. The technical strength underscores positive market sentiment and confidence in MTZ’s financial health and prospects.
Image Source: Zacks Investment Research
Analysts See Upside for MTZ Despite Premium Valuation
Despite its high valuation, MasTec‘s upward revisions in earnings per share estimates for 2025 highlight analyst confidence in the stock. In the past 60 days, analysts have raised their estimates to $5.40 from $5.30. The estimated figure indicates a year-over-year growth rate of 43.9%.
Image Source: Zacks Investment Research
Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
The Zacks Consensus Estimate for 2025 sales is pegged at $13.31 billion, suggesting 8.9% year-over-year growth.
Conclusion: Why MTZ Stock is Still a Buy
Despite its high valuation, MasTec is a compelling investment opportunity, supported by strong demand in Clean Energy, Power Delivery, and Communications. This Zacks Rank #2 (Buy) company is well-positioned to capitalize on its solid backlog, increasing customer demand and rising infrastructure spending driven by government initiatives. With its diversified business model and strategic focus on high-growth sectors, MasTec is poised for continued growth. As analysts project growth in earnings, the company continues to show upside potential for investors, reinforcing confidence in its long-term performance. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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MasTec Stock Trading at a Premium to Industry: Should You Buy?
MasTec, Inc. (MTZ - Free Report) shares are currently trading at a premium to the Zacks Building Products - Heavy Construction industry, with its forward 12-month price-to-earnings (P/E) ratio of 28.95X. The industry is currently trading at 22.47X.
However, its Value Score of B suggests that the stock is moderately valued, indicating a fair balance between price and growth potential. Additionally, the stock holds a strong VGM Score of A, supported by a Growth Score of A and a Momentum Score of B, highlighting its overall performance potential.
The company is also currently trading at a premium compared with similar players like EMCOR Group, Inc. (EME - Free Report) , AECOM (ACM - Free Report) and Fluor Corporation (FLR - Free Report) . EME, ACM and FLR are trading with forward 12-month P/E multiples of 23.84, 20.74 and 18.69, respectively.
MasTec Stock Trading at a Premium
Image Source: Zacks Investment Research
Although the premium valuation may raise some concerns, it underscores the market’s confidence in MTZ's robust financial performance and continued growth potential. The stock has shown impressive growth, soaring 138.4% in the past year and outpacing the 115.2% growth of the industry. This remarkable performance has drawn investor attention. Over the same period, the stock has significantly outperformed the broader Zacks Construction sector’s 19.9% and the S&P 500 index’s 24.8% growth.
The company is benefiting from a diversified business model and strategic acquisitions. Improved project efficiencies and a solid backlog are supporting growth, while solid market demand positions MasTec for continued success across key segments.
MTZ Stock’s Past-Year Price Performance
Image Source: Zacks Investment Research
What Fuels MTZ’s Premium Valuation?
Diversified Business Model: MasTec is positioned for steady growth thanks to its diversified business model and strong market demand. The company benefits from a growing backlog driven by increased customer demand for services in areas such as Clean Energy & Infrastructure, Power Delivery and Communications.
As of Sept. 30, 2024, MasTec reported an 18-month backlog of $13.86 billion, reflecting a 3.9% sequential increase and 11% year-over-year growth. This record backlog provides strong momentum heading into 2025, ensuring visibility into upcoming projects that will drive the company’s performance in the future.
Communications Fueling MasTec’s Growth: MasTec’s Communications segment is growing steadily, driven by strong demand for advanced network infrastructure. In the wireless sector, MasTec is expanding its market share with AT&T while the ongoing Nokia Ericsson swap-out continues on track.
The company is also seeing strong demand in the wireline segment. The impacts of Broadband Equity, Access, and Deployment funding, along with the growing need for fiber driven by artificial intelligence and data centers, are expected to fuel further growth. Additionally, MasTec secured a major fiber program build from Lumen Technologies, spanning over 8,000 miles to improve network infrastructure and connectivity. These efforts reflect the company’s success in leveraging the expansion of digital infrastructure to drive future growth.
Infrastructure Growth Driving MTZ’s Prospects: MasTec remains optimistic about its growth trajectory, driven by favorable macroeconomic trends, operational efficiencies and a strong project mix. The company is well-positioned to benefit from the rise in infrastructure spending, supported by initiatives such as the Infrastructure Investment and Jobs Act and the Inflation Reduction Act.
Increased investments in clean energy, power delivery and water infrastructure align with MasTec’s strategic focus on high-growth sectors, strengthening its position to capture more market opportunities. For 2025, MasTec anticipates continued growth across its key segments, including communications, power delivery and clean energy. The company expects double-digit revenue growth in these areas and improved margins compared to 2024.
MTZ Stock Trading Above 50 & 200-Day SMA
Technical indicators suggest a continued strong performance for MasTec. From the graphical representation given below, it can be observed that the MTZ stock is trading above both the 50-day simple moving average (SMA) and 200-day SMA, signaling a bullish trend. The technical strength underscores positive market sentiment and confidence in MTZ’s financial health and prospects.
Image Source: Zacks Investment Research
Analysts See Upside for MTZ Despite Premium Valuation
Despite its high valuation, MasTec‘s upward revisions in earnings per share estimates for 2025 highlight analyst confidence in the stock. In the past 60 days, analysts have raised their estimates to $5.40 from $5.30. The estimated figure indicates a year-over-year growth rate of 43.9%.
Image Source: Zacks Investment Research
Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
The Zacks Consensus Estimate for 2025 sales is pegged at $13.31 billion, suggesting 8.9% year-over-year growth.
Conclusion: Why MTZ Stock is Still a Buy
Despite its high valuation, MasTec is a compelling investment opportunity, supported by strong demand in Clean Energy, Power Delivery, and Communications. This Zacks Rank #2 (Buy) company is well-positioned to capitalize on its solid backlog, increasing customer demand and rising infrastructure spending driven by government initiatives. With its diversified business model and strategic focus on high-growth sectors, MasTec is poised for continued growth. As analysts project growth in earnings, the company continues to show upside potential for investors, reinforcing confidence in its long-term performance. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.