Renewable Drive to Benefit Quanta Services' (PWR) Q2 Earnings
Quanta Services, Inc. PWR is scheduled to report second-quarter 2023 results on Aug 3, before the opening bell.
In the last reported quarter, the company’s adjusted earnings and revenues surpassed the Zacks Consensus Estimate by 12.7% and 8.4%, respectively. On a year-over-year basis, although total revenues increased 11.7%, earnings declined 8.1%.
Encouragingly, earnings topped analysts’ expectations in 15 of the trailing 16 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for second-quarter earnings per share (EPS) remained unchanged at $1.67 over the past 60 days. The estimated figure indicates an 8.4% increase from the year-ago EPS of $1.54. The consensus mark for revenues is $4.69 billion, suggesting a 10.9% year-over-year rise.
Quanta Services, Inc. Price and EPS Surprise
Quanta Services, Inc. price-eps-surprise | Quanta Services, Inc. Quote
Factors to Note
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, are likely to have benefited Quanta Services 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 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 operating margin to be slightly pressured in the second quarter due to challenging weather conditions in the northern and western parts of North America, comparable to segment margins in the second quarter of 2022.
For the Electric Power segment, we expect revenues to grow 9.1% year over year to $2,400.2 million from a year ago. Operating margin is expected to be 9.9% in the quarter, down from 10.6% 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 second-quarter revenues to grow sequentially. Second-quarter margins are expected to show solid improvement.
For the Underground Utility and Infrastructure Solutions segment, our model predicts revenues to decline 1.5% year over year to $1,091.6 million from a year ago. Operating margin is expected to be 7.7% in the quarter, down from 8.1% 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 to-be-reported quarter.
From a seasonality perspective, the company expects segment revenues in the quarter to grow sequentially. It also expects segment margins for the quarter to be in the upper-single digits, slightly below the second quarter of 2022.
For the Renewable Energy Infrastructure Solutions segment, our model predicts revenues to grow 20.6% year over year to $1,114.7 million from a year ago. Operating margin is expected to be 8.6% in the quarter, down from 8.8% 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: It currently carries a Zacks Rank #2.
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.
AECOM ACM has an Earnings ESP of +1.05% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
ACM’s earnings topped the consensus mark in all the last four quarters, the average being 4.8%. Earnings for the to-be-reported quarter are expected to increase 10.5% year over year.
Willdan Group, Inc. WLDN has an Earnings ESP of +108.33% and a Zacks Rank of 3.
WLDN’s earnings for the to-be-reported quarter are expected to increase 300%. The company reported better-than-expected earnings in two of the last four quarters and missed on two occasions, the average surprise being 1,289.3%.
Louisiana-Pacific Corporation LPX has an Earnings ESP of +5.54% and carries a Zacks Rank of 3.
LPX’s earnings for the to-be-reported quarter are expected to decline 84.7%. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 98.2%.
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Quanta Services, Inc. (PWR) : Free Stock Analysis Report
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Louisiana-Pacific Corporation (LPX) : Free Stock Analysis Report
Willdan Group, Inc. (WLDN) : Free Stock Analysis Report
