Increased Infrastructure Spending in Electrical Transmission and Oil and Gas Transportation: A Wall Street Transcript Interview with Noelle Dilts, Vice President at Stifel, Nicolaus & Co., Inc.

Wall Street Transcript

67 WALL STREET, New York - April 18, 2013 - The Wall Street Transcript has just published its Building Materials, Construction and Housing Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: North American Electrical Transmission, Infrastructure Build in Emerging Markets, Strong End Markets for Building Products, Energy infrastructure companies, Infrastructure spending

Companies include: Quanta Services Inc. (PWR), MasTec, Inc. (MTZ), MYR Group, Inc. (MYRG), Willbros Group Inc. (WG), Dycom Industries Inc. (DY), General Cable Corp. (BGC), AZZ incorporated (AZZ), Powell Industries, Inc. (POWL), Acuity Brands, Inc. (AYI), Hubbell Inc. (HUB-B), WESCO International Inc. (WCC), EMCOR Group Inc. (EME), Belden, Inc. (BDC), Anixter International Inc. (AXE), TETRA Technologies Inc. (TTI), AT&T, Inc. (T) and many more.

In the following excerpt from the Building Materials, Construction and Housing Report, an expert analyst discusses the outlook for the sector for investors:

TWST: How are the valuations in the space?

Ms. Dilts: Again, because my space is so broad and diverse, the valuations are varied. You have seen the valuations on the companies I laid out for you, Quanta and MasTec, have come up as some of these trends have started to take shape. They are trading at some of the higher multiples in my space. Quanta is trading at about 18.5 times my 2013 earnings estimate and 10.3 times EV to EBITDA on 2012, and 8.3 times EV to EBITDA on 2013. MasTec is trading at slightly lower multiple, and there is a discount there for a reason, but it's trading at 14.7 times 2013 forward earnings and 12.3 times 2014 earnings and 8.7 times EV to EBITDA on 2012, 6.3 times EV to EBITDA on 2013.

You have to realize, however, that in part the reason for that is because the companies have set pretty achievable bars - in particular, for their pipeline business - with their guidance, and I think you are going to see earnings estimates come up through the year as the companies are awarded projects. So I think that part of the reason that the multiples look little bit higher is that they are based on conservative earnings expectations.

TWST: Should investors consider including the electric infrastructure companies specifically in their portfolios?

Ms. Dilts: I think this is a great place to be, especially with companies that have exposure to these powerful investment trends of electric transmission, oil and gas pipeline. And the reason for that is, especially in the oil and gas side, we're just getting into the bidding season for some of these bigger jobs, so you are going to see project awards for the contractors through the year. As they are awarded these projects, you will see earnings expectations come up and upward earnings revisions.

There is some enthusiasm out there surrounding these trends. I think that they are going to be more powerful than...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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