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Quanta Services (PWR) Down 3.6% Since Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Quanta Services, Inc. (PWR - Free Report) . Shares have lost about 3.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Quanta Services Q4 Earnings Miss, Revenues Up Y/Y
Quanta Services reported fourth-quarter 2016 adjusted earnings (including adjustments for stock-based compensation expense) of $0.52 per share, which lagged the Zacks Consensus Estimate by 3.7%.
The company’s non-GAAP earnings from continuing operations came in at $0.56, up 86.7% from the prior-year quarter tally of $0.30. The bottom-line growth is attributable to a record top line and sound execution of projects at the base electric power business.
For full-year 2016, non-GAAP earnings from continuing operations came in at $1.51, up over 36% from the year-ago quarter tally of $1.11 per share.
Inside the Headlines
Total revenue in the quarter came in at a record level of $2,103 million, up an impressive 10.7% on a year-over-year basis. However, the figure lagged the Zacks Consensus Estimate of $2,161 million marginally. The top-line growth came on the back of projects that moved into construction during the reported quarter. Robust growth of revenues at the Oil and Gas Infrastructure segment acted as the primary catalyst.
Of the total quarterly revenue, the Electric Power Infrastructure segment accounted for 61%, and the Oil and Gas Infrastructure segment represented 39%.
Segment wise, revenues from Electric Power Infrastructure edged down about 0.7% year over year to $1,282 million. However, Oil and Gas Infrastructure segmental revenues were up a whopping 35.1% to $821 million.
For 2016, the company posted revenues of $7.65 billion, up a meagre 1% year over year.
In fourth-quarter 2016, operating income came in at $117.9 million, up significantly from $3.6 million recorded in the prior-year quarter.
At year end, Quanta Services’ consolidated total backlog was $9,749.8 million, up from $9,386.9 million at the end of last year.
Liquidity
Quanta Services exited the quarter with cash and cash equivalents of $112.2 million, down from $128.8 million as of Dec 31, 2015. At quarter end, the company’s long-term debt and notes payable was $353.6 million, down from $475.4 million as of Dec 31, 2015.
Notable Developments
After the end of the quarter, Alberta Powerline (a limited partnership formed by Quanta Services and ATCO Group) won the approval to construct and operate the Fort McMurray West 500 kV Transmission Project from the Alberta Utilities Commission. Construction is slated to begin in the second half of 2017, with completion expected in 2019. This is the largest project which Quanta Services has ever won and has been reflected in the company’s backlog since 2015.
Guidance
Concurrent with the earnings release, Quanta Services provided its full-year 2017 earnings and revenues guidance. The company projects adjusted earnings per share from continuing operations in the range of $1.80–$2.05. Quanta Services expects revenues for the year in the band of $7.9–$8.5 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been four upward revisions for the current quarter compared to one downward. In the past month, the consensus estimate also shifted upward by 20.8% due to these changes.
At this time, Quanta Services' stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Quanta Services (PWR) Down 3.6% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Quanta Services, Inc. (PWR - Free Report) . Shares have lost about 3.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Quanta Services Q4 Earnings Miss, Revenues Up Y/Y
Quanta Services reported fourth-quarter 2016 adjusted earnings (including adjustments for stock-based compensation expense) of $0.52 per share, which lagged the Zacks Consensus Estimate by 3.7%.
The company’s non-GAAP earnings from continuing operations came in at $0.56, up 86.7% from the prior-year quarter tally of $0.30. The bottom-line growth is attributable to a record top line and sound execution of projects at the base electric power business.
For full-year 2016, non-GAAP earnings from continuing operations came in at $1.51, up over 36% from the year-ago quarter tally of $1.11 per share.
Inside the Headlines
Total revenue in the quarter came in at a record level of $2,103 million, up an impressive 10.7% on a year-over-year basis. However, the figure lagged the Zacks Consensus Estimate of $2,161 million marginally. The top-line growth came on the back of projects that moved into construction during the reported quarter. Robust growth of revenues at the Oil and Gas Infrastructure segment acted as the primary catalyst.
Of the total quarterly revenue, the Electric Power Infrastructure segment accounted for 61%, and the Oil and Gas Infrastructure segment represented 39%.
Segment wise, revenues from Electric Power Infrastructure edged down about 0.7% year over year to $1,282 million. However, Oil and Gas Infrastructure segmental revenues were up a whopping 35.1% to $821 million.
For 2016, the company posted revenues of $7.65 billion, up a meagre 1% year over year.
In fourth-quarter 2016, operating income came in at $117.9 million, up significantly from $3.6 million recorded in the prior-year quarter.
At year end, Quanta Services’ consolidated total backlog was $9,749.8 million, up from $9,386.9 million at the end of last year.
Liquidity
Quanta Services exited the quarter with cash and cash equivalents of $112.2 million, down from $128.8 million as of Dec 31, 2015. At quarter end, the company’s long-term debt and notes payable was $353.6 million, down from $475.4 million as of Dec 31, 2015.
Notable Developments
After the end of the quarter, Alberta Powerline (a limited partnership formed by Quanta Services and ATCO Group) won the approval to construct and operate the Fort McMurray West 500 kV Transmission Project from the Alberta Utilities Commission. Construction is slated to begin in the second half of 2017, with completion expected in 2019. This is the largest project which Quanta Services has ever won and has been reflected in the company’s backlog since 2015.
Guidance
Concurrent with the earnings release, Quanta Services provided its full-year 2017 earnings and revenues guidance. The company projects adjusted earnings per share from continuing operations in the range of $1.80–$2.05. Quanta Services expects revenues for the year in the band of $7.9–$8.5 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been four upward revisions for the current quarter compared to one downward. In the past month, the consensus estimate also shifted upward by 20.8% due to these changes.
Quanta Services, Inc. Price and Consensus
Quanta Services, Inc. Price and Consensus | Quanta Services, Inc. Quote
VGM Scores
At this time, Quanta Services' stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.