U.S. Markets open in 6 hrs 29 mins

MasTec (MTZ) Tops Q4 Earnings, Revenues; Offers '17 View

Zacks Equity Research

MasTec, Inc. MTZ reported fourth-quarter 2016 adjusted earnings per share of 68 cents (excluding one-time items barring non-cash stock compensation expense), a substantial year-over-year improvement of 278%. Further, earnings beat the Zacks Consensus Estimate of 50 cents by a comfortable margin of 18% and came ahead of management's guidance of 54 cents per share.

Including one-time items, MasTec reported earnings of 66 cents per share compared with a loss of 96 cents reported in the prior-year quarter.

Operational Update

MasTec’s net sales improved 31% year over year to $1.34 billion in the quarter, coming ahead of the Zacks Consensus Estimate of $1.32 billion, as well as management’s guidance of $1.3 billion. The better-than-expected performance came on the back of increase in revenues across all segments, particularly led by the Oil and Gas segment which recorded a surge of 62% year over year to $570 million.

MasTec, Inc. Price, Consensus and EPS Surprise

 

MasTec, Inc. Price, Consensus and EPS Surprise | MasTec, Inc. Quote

The Electrical Transmission segment followed with a 40.5% rise to $100.2 million in revenues. The Communication segment witnessed 14% growth in revenues to $595.6 million; while revenues in the Power Generation and Industrial segment increased 2.3% to $81.1 million.

Cost of sales in the quarter advanced 22% year over year to $1,120 million. Gross profit soared a whopping 99% to $221 million from $111 million in the prior-year quarter. Gross margin expanded 570 basis points to 16.5% in the quarter.

General and administrative expenses increased 12.9% to $66.4 million. MasTec reported operating profit of $155 million in the quarter, a 196% jump from $52.4 million in the year-earlier quarter. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $154 million, compared with $82 million in the year-ago quarter.

Financial Details

MasTec reported cash and cash equivalents of $38.8 million at the end of 2016, up from $5 million as of Dec 31, 2015. The company generated cash flow from operations of $205.6 million in 2016 as against $367.4 million in 2015. Long-term debt was $961.4 million as of Dec 31, 2016, compared with $933 million as of Dec 31, 2015.

Guidance

For full-year 2017, MasTec guided adjusted earnings per share guidance to approximate $2.35, a 24% increase over 2016. Revenues are now projected to grow 7% to $5.5 billion. Additionally, the company estimates its adjusted EBITDA to increase 15% to $550 million.

Additionally, first-quarter 2017, MasTec guided revenues to be roughly $1.05 billion. The company anticipates adjusted EBITDA of around $125 million and adjusted earnings per share of 51 cents.

Share Price Performance

In the last one year, MasTec has outperformed the Zacks classified Machinery-Construction/Mining sub-industry with respect to price performance. The stock gained around 154.7%, while the industry rose 43.9% over the same time frame.



Zacks Rank & Key Picks

MasTec currently sports a Zacks Rank #1 (Strong Buy).

Some better-ranked stocks in the sector include Boise Cascade Co. BCC, Louisiana-Pacific Corp. LPX and LSI Industries Inc. LYTS. All of the three stocks boast a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Boise Cascade has an earnings ESP of 436.26% for the trailing four quarters. Louisiana-Pacific has an average earnings surprise of 66.28% for the last four quarters, while LSI Industries has an average earnings surprise of 27.28% for the past four quarters.

Zacks' Top 10 Stocks for 2017

In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?

Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>


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
 
LSI Industries Inc. (LYTS): Free Stock Analysis Report
 
Louisiana-Pacific Corporation (LPX): Free Stock Analysis Report
 
MasTec, Inc. (MTZ): Free Stock Analysis Report
 
Boise Cascade, L.L.C. (BCC): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research