Factors Setting the Tone for Quanta Services' (PWR) Q3 Earnings
Quanta Services, Inc. PWR is scheduled to report third-quarter 2023 results on Nov 2, before the opening bell.
In the last reported quarter, the company’s adjusted earnings per share (EPS) lagged the Zacks Consensus Estimate by 1.2%, but revenues beat the same by 7.5%. On a year-over-year basis, total revenues increased 19.3% and EPS grew 6.5%.
Encouragingly, earnings topped analysts’ expectations in 16 of the trailing 17 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for third-quarter EPS has declined to $2.14 from $2.15 over the past 60 days. The estimated figure indicates a 20.9% increase from the year-ago EPS of $1.77. The consensus mark for revenues is $5.26 billion, suggesting a 17.9% year-over-year rise.
Quanta Services, Inc. Price and EPS Surprise
Quanta Services, Inc. price-eps-surprise | Quanta Services, Inc. Quote
Factors to Note
Quanta Services is expected to have experienced a positive impact in the upcoming quarter through the implementation and utilization of technological solutions that cover a wide range of initiatives aimed at reducing carbon emissions. These initiatives encompass carbon management, mitigation, and compliance consulting, as well as the development of essential infrastructure to support the delivery of clean, carbon-free energy solutions. 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 have helped the company to boost its profit level to some extent.
Segment-wise, the Electric Power Infrastructure Services segment (which accounted for 52.4% of total revenues in 2022) 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.
From a seasonality perspective, PWR expects segment revenues to grow sequentially in the quarter. It also expects the operating margin to be in double digits in the quarter.
For the Electric Power segment, our model predicts segment revenues to grow 12.1% year over year to $2,557.8 million from a year ago. Operating margin is expected to be 11.4% in the quarter, down from 11.2% 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 third-quarter segment revenues to be in-line with the prior quarter. Third-quarter margins are expected to decline sequentially.
For the Underground Utility and Infrastructure Solutions segment, our model predicts revenues to grow 3.8% year over year to $1,243.7 million from a year ago. Operating margin is expected to be 7.3% in the quarter, down from 8.5% a year ago.
Meanwhile, the Renewable Energy Infrastructure Solutions segment (22.1%), which 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 to-be-reported quarter.
From a seasonality perspective, the company expects segment revenues in the quarter to grow sequentially. The company also expects segment margins for the quarter to be in double digits.
For the Renewable Energy Infrastructure Solutions segment, our model predicts revenues to grow 43.1% year over year to $1,400.2 million from a year ago. Operating margin is expected to be 10.1% in the quarter, up from 9.1% 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 0.00%.
Zacks Rank: Quanta Services currently carries a Zacks Rank #3.
Stocks With 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.
Louisiana-Pacific Corporation LPX has an Earnings ESP of +2.07% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
LPX’s earnings topped the consensus mark in three of the last four quarters and missed on one occasion, with the average being 95.8%. Earnings for the to-be-reported quarter are expected to decline 19.2% year over year.
Dycom Industries DY has an Earnings ESP of +1.24% and sports a Zacks Rank #1.
DY’s earnings topped the consensus mark in all the last four quarters, the average being 147.4%. Earnings for the to-be-reported quarter are expected to increase 4.7% year over year.
Construction Partners, Inc. ROAD has an Earnings ESP of +2.91% and sports a Zacks Rank #1.
ROAD’s earnings topped the consensus mark in three of the last four quarters, with the average being 10.6%. Earnings for the to-be-reported quarter are expected to rise 108% year over year.
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Quanta Services, Inc. (PWR) : Free Stock Analysis Report
Louisiana-Pacific Corporation (LPX) : Free Stock Analysis Report
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Construction Partners, Inc. (ROAD) : Free Stock Analysis Report
