Quanta Services, Inc. (PWR) is geared up to announce its fourth-quarter 2023 results on Feb 22, before the market opens.
During the last reported quarter, the company outpaced the Zacks Consensus Estimate for adjusted earnings per share (EPS) and revenues by 4.7% and 6.9%, respectively. Year over year, total revenues surged by 26.6%, and EPS soared by 26%.
Notably, the company has surpassed analysts’ earnings expectations in 17 of the past 18 quarters.
Estimate Revision Trend
The Zacks Consensus Estimate for the fourth-quarter EPS has held steady at $1.97 over the past 60 days. This suggests a 17.3% improvement from the year-ago EPS of $1.68. The consensus mark for revenues is pinned at $5.15 billion, reflecting a 16.6% year-over-year increase.
Factors at Play
Analysts expect Quanta Services to have benefited in the forthcoming quarter from the implementation and utilization of various technological solutions designed to reduce carbon emissions. These initiatives include carbon management, mitigation, and compliance consulting, as well as the development of crucial infrastructure to facilitate the delivery of clean, carbon-free energy solutions. The company has been capitalizing on these megatrends to spearhead the energy transition and drive technological advancements. Initiatives such as electric vehicle charging infrastructure and the undergrounding of electrical infrastructure have gained traction, potentially bolstering the company’s profitability to some extent.
On a segmental basis, the Electric Power Infrastructure Services segment, which constituted 52.4% of total revenues in 2022, is expected to have benefited from robust business dynamics, driven by ongoing grid modernization, system hardening, renewable energy interconnections, and effective execution. Moreover, contributions from major transmission projects in progress in Canada and revenues from acquired businesses likely aided bottom-line growth in the to-be-reported quarter.
Quanta Services expects segment revenues to grow in the mid-single-digit range from a year ago.
For the Electric Power segment, the model predicts that segment revenues will have increased by 4% year over year to $2.41 billion, with the operating margin expected to be 10.8% in the quarter, a decline from 11.5% a year ago.
The Underground Utility and Infrastructure Solutions segment, accounting for 25.5% of total revenues in 2022, has seen heightened demand for gas utility and pipeline integrity services, as well as pent-up demand for deferred services due to the pandemic’s impact on the downstream market.
For the Underground Utility and Infrastructure Solutions segment, the model predicts a revenue decline of 8.7% year over year to $1 billion from a year ago. The operating margin is expected to be 7% in the quarter, down from 7.1% a year ago.
Meanwhile, the Renewable Energy Infrastructure Solutions segment, constituting 22.1% of total revenues, encompasses services and solutions supporting the delivery of renewable energy. This includes renewable generation, electric transmission, substations, and battery storage, with Blattner’s operations accounting for the majority of these solutions. This addition is anticipated to have contributed to the company’s top line in the to-be-reported quarter.
For the Renewable Energy Infrastructure Solutions segment, the model predicts revenues to have surged by 68.2% year over year to $1.68 billion from a year ago. Operating margin is expected to be 9% in the quarter, up from 6.4% a year ago.
Zacks Model Prediction
The proven model does not unequivocally forecast an earnings beat for Quanta Services this time. While a favorable Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increase the likelihood of an earnings beat, the company currently carries a Zacks Rank #4 (Sell).
Earnings ESP: The company’s Earnings ESP stands at 0.00%.
Zacks Rank: Quanta Services presently carries a Zacks Rank #4 (Sell).
Stocks with Potential
Here are some other companies in the Zacks Construction sector that, according to the model, have the right combination of elements to potentially outdo earnings estimates in the upcoming quarters:
Armstrong World Industries (AWI) has an Earnings ESP of +2.66% and carries a Zacks Rank #2.
AWI has surpassed the consensus mark in three of the last four quarters and missed once, with an average surprise of 7.9%. Earnings for the to-be-reported quarter are expected to decline by 4.6% year over year.
Floor & Decor Holdings, Inc. (FND) has an Earnings ESP of +4.87% and a Zacks Rank #3.
FND’s earnings for the to-be-reported quarter are projected to slump by 57.8%. The company has outperformed earnings estimates in two of the last four quarters, missed once, and met once, with the average surprise at 4.9%.
Enviva Inc. (EVA) has an Earnings ESP of +37.36% and holds a Zacks Rank #2.
EVA has missed the consensus mark in each of the last four quarters, with an average miss of 114.8%. Earnings for the to-be-reported quarter are anticipated to decline by 59.2% year over year.
Stay updated on impending earnings releases with the Zacks Earnings Calendar.
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The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Nasdaq, Inc.
