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It's been a good week for Quanta Services, Inc. (NYSE:PWR) shareholders, because the company has just released its latest quarterly results, and the shares gained 2.1% to US$62.43. Revenues were US$3.0b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$1.13, an impressive 27% ahead of estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
After the latest results, the eleven analysts covering Quanta Services are now predicting revenues of US$11.9b in 2021. If met, this would reflect a credible 4.6% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to soar 23% to US$3.41. In the lead-up to this report, the analysts had been modelling revenues of US$12.0b and earnings per share (EPS) of US$3.33 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target rose 19% to US$70.42, suggesting that higher earnings estimates flow through to the stock's valuation as well. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Quanta Services, with the most bullish analyst valuing it at US$78.00 and the most bearish at US$55.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Quanta Services' revenue growth is expected to slow, with forecast 4.6% increase next year well below the historical 12%p.a. growth over the last five years. Compare this to the 61 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 5.2% per year. So it's pretty clear that, while Quanta Services' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Quanta Services following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Quanta Services going out to 2023, and you can see them free on our platform here..
Before you take the next step you should know about the 1 warning sign for Quanta Services that we have uncovered.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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