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Quanta Services (PWR) Q2 Earnings Lag, Revenues Top Estimates

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Quanta Services Inc. PWR reported second-quarter 2018 adjusted earnings of 59 cents per share, missing the Zacks Consensus Estimate of 61 cents by 3.3%.

The company’s reported earnings also grew 18% from the prior-year quarter tally of 50 cents. The bottom-line growth is attributable to a robust top line and sound execution of projects.

Total revenues of this specialty contractor for utility and energy companies came in at $2,656.2 million, surpassing the consensus mark of $2,548 million by 4.3%. The top line also increased 20.7% year over year, aided by robust revenue growth across the board.

Inside the Headlines

Of the total quarterly revenues, the Electric Power Infrastructure segment accounted for 59.1%, and Oil and Gas Infrastructure contributed 40.9%.

Segment wise, revenues from Electric Power Infrastructure were up 20.7% year over year to $1,570.2 million. However, Oil and Gas Infrastructure segment revenues were also up by the same percentage of 20.7% to $1,086.2 million.

In second-quarter 2018, operating income came in at $123 million, up from $109.8 million a year ago.

At the end of Jun 30, 2018, Quanta Services’ consolidated total backlog was $7,437.5 million, down from $10,083.2 million at the end of 2017.

Quanta Services, Inc. Price, Consensus and EPS Surprise


Quanta Services, Inc. Price, Consensus and EPS Surprise | Quanta Services, Inc. Quote


Quanta Services exited the quarter with cash and cash equivalents of $120.4 million, down from $138.3 million as of Dec 31, 2017. At quarter end, the company’s long-term debt and notes payable was $840.7 million, up from $670.7 million as of Dec 31, 2017.

Notable Developments

During the reported quarter, Quanta Services was selected by Enbridge Pipelines Inc. for three spreads of phase two of the Canadian section of the Line 3 Replacement Program.

The company was also selected for the Site C Transmission Line project in northeast British Columbia by BC Hydro.

2018 Guidance Updated

Buoyed by strong performance through 2018 so far, the company remains optimistic of the second half of 2018, given strengthening of its base business activity that seasonally increases and ramped-up construction activity in its larger pipeline projects.

The company reaffirmed its adjusted earnings expectation for 2018 in the range of $2.55-$2.95 per share. Considering the impressive operating performance so far in 2018, the company increased its revenue projection to the range of $10.35-$10.75 billion from earlier expectation of $9.95-$10.55 billion. EBITDA is expected in the range of $763.3-$864.8 million (versus $756.5-$858.1 million projected earlier). Adjusted EBITDA is anticipated between $824.7 million and $926.2 million.

Zacks Rank & Key Picks

Quanta Services currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader sector include Louisiana-Pacific Corporation LPX, Jacobs Engineering Group Inc. JEC and KBR, Inc. KBR. While Louisiana-Pacific sports a Zacks Rank #1, Jacobs and KBR both hold a Zacks Rank #2 (Buy).

Louisiana-Pacific is expected to record an EPS growth rate of 30.5% for 2018.

Jacobs delivered an average positive surprise of 12.34% in the trailing four quarters, beating estimates all through.

KBR also recorded an average positive surprise of 12.26% in the trailing four quarters, beating estimates in three of the past four quarters.

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