Advertisement
Canada markets closed
  • S&P/TSX

    21,554.86
    -26.49 (-0.12%)
     
  • S&P 500

    5,464.62
    -8.55 (-0.16%)
     
  • DOW

    39,150.33
    +15.57 (+0.04%)
     
  • CAD/USD

    0.7302
    -0.0004 (-0.05%)
     
  • CRUDE OIL

    82.34
    +0.17 (+0.21%)
     
  • Bitcoin CAD

    88,048.50
    +555.73 (+0.64%)
     
  • CMC Crypto 200

    1,347.52
    -12.81 (-0.94%)
     
  • GOLD FUTURES

    2,334.70
    -34.30 (-1.45%)
     
  • RUSSELL 2000

    2,022.03
    +4.64 (+0.23%)
     
  • 10-Yr Bond

    4.2570
    +0.0030 (+0.07%)
     
  • NASDAQ

    17,689.36
    -32.23 (-0.18%)
     
  • VOLATILITY

    13.20
    -0.08 (-0.60%)
     
  • FTSE

    8,237.72
    -34.74 (-0.42%)
     
  • NIKKEI 225

    38,596.47
    -36.55 (-0.09%)
     
  • CAD/EUR

    0.6826
    +0.0005 (+0.07%)
     

Quanta Services (PWR) to Post Q1 Earnings: What to Expect?

Quanta Services, Inc. PWR is scheduled to report first-quarter 2023 results on May 4, before the opening bell.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 4.4% and grew 9.1% year over year. Total revenues surpassed the consensus mark by 3.4% and increased 12.6% year over year.

Encouragingly, earnings topped analysts’ expectations in 14 of the trailing 15 quarters.

Quanta Services, Inc. Price and EPS Surprise

Quanta Services, Inc. Price and EPS Surprise
Quanta Services, Inc. Price and EPS Surprise

Quanta Services, Inc. price-eps-surprise | Quanta Services, Inc. Quote

The Trend in Estimate Revision

The Zacks Consensus Estimate for first-quarter earnings declined to $1.10 per share from $1.13 per share over the past 30 days. The estimated figure indicates a 19.7% decrease from the year-ago earnings of $1.37 per share. The consensus mark for revenues is $4.08 billion, suggesting a 3% year-over-year rise.

Factors to Note

From the seasonal perspective, Quanta traditionally experiences lower gas distribution business activity in the first quarter, impacting revenues and pressurizes margins.

Nonetheless, apart from the seasonal perspective, the development and deployment of technology solutions across the full spectrum of decarbonization efforts, including carbon management mitigation and compliance consulting, as well as all facets of infrastructure for providing carbon-free energy solutions, is likely to benefit the company in the to-be-reported quarter. The company has been capitalizing on the megatrends to lead the energy transition and enable technological development. Initiatives such as electric vehicle charging infrastructure and undergrounding of electrical infrastructure are gaining momentum. These factors are likely to help the company to boost its profit level to some extent.

Segment-wise, the Electric Power Infrastructure Services segment (which accounted for 52.4% of 2022 total revenues) is likely to have benefited from broad-based business strength, driven by ongoing grid modernization, system hardening, renewable energy interconnections and solid execution. Also, contributions from larger transmission projects underway in Canada and revenues from the acquired businesses are likely to have supported bottom-line growth in the to-be-reported quarter.

However, from a seasonality perspective, PWR expects revenues to be lowest in 2023 in the first quarter, with mid-single-digit growth from the year-ago period. It also expects first-quarter operating margins to be around 9%, the lowest for the year.
    
For the Electric Power segment, we expect revenues to grow 5.2% year over year to $2,249.6 million from a year ago.

The Underground Utility and Infrastructure Solutions segment (which accounted for 25.5% of total revenues in 2022) has been benefiting from higher demand for gas utility and pipeline integrity services and pent-up demand for the services that were deferred due to the effects of COVID-19 on the downstream market. From a seasonality perspective, PWR anticipates first-quarter revenues to be comparable to the year-ago level. First-quarter margins are expected to be the lowest for 2023 by around 5%.

For the Underground Utility and Infrastructure Solutions segment, our model predicts revenues to grow 0.3% year over year to $953.6 million from a year ago.

Meanwhile, the Renewable Energy Infrastructure Solutions segment (22.1%) — consists of services and solutions for infrastructure supporting the delivery of renewable energy — including renewable generation, electric transmission, substations and battery storage, with Blattner's operations representing the majority of those solutions. This addition is expected to have contributed to the company’s top line in the quarter.

From a seasonality perspective, the company expects segment revenues in the quarter to be between $850 and $900 million. It also expects margins for the quarter to be the lowest for the year, likely between 4% and 5%.

For the Renewable Energy Infrastructure Solutions segment, our model predicts revenues to grow 2.1% year over year to $894.4 million from a year ago.

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for Quanta Services this time around. A combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The company has an Earnings ESP of -2.28%.

Zacks Rank: It currently carries a Zacks Rank #2.

Stocks With the Favorable Combination

Here are some other companies in the Zacks Construction sector, which according to our model, have the right combination of elements to post an earnings beat on their respective quarters to be reported.

Trex Company, Inc.  TREX has an Earnings ESP of +11.34% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Trex Company have increased 29.3% year to date, outperforming the industry’s 3.3% growth. TREX’s earnings beat the estimates in three of the trailing four quarters and missed once, the average surprise being 7.2%.

Howmet Aerospace Inc. HWM has an Earnings ESP of +0.88% and a Zacks Rank #3.

Shares of HWM have increased 12.4% year to date, outperforming the industry’s 8.4% rise. HWM’s earnings beat estimates in two of the trailing four quarters and met on other two occasions, the average surprise being 3.2%.

MasTec MTZ has an Earnings ESP of +0.70% and a Zacks Rank #3.

Shares of MTZ have increased 2.4% year to date, underperforming the industry’s 9% rise. MTZ’s earnings beat estimates in three of the trailing four quarters and met on other occasion, the average surprise being 21.2%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

ADVERTISEMENT

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Quanta Services, Inc. (PWR) : Free Stock Analysis Report

Trex Company, Inc. (TREX) : Free Stock Analysis Report

MasTec, Inc. (MTZ) : Free Stock Analysis Report

Howmet Aerospace Inc. (HWM) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research