Quanta Services Shows Mixed Results amid Growth in Energy Infrastructure

Quanta Services, Inc. (PWR), headquartered in Houston, Texas, specializes in infrastructure solutions for the electric and gas utility, renewable energy, communications, and pipeline industries. With a market capitalization of $43.1 billion and more than 50,000 employees, the company operates across all 50 states and in over 15 countries.

Stock Performance Overview

Over the past 52 weeks, Quanta’s stock has outperformed the broader market. While PWR shares have risen by 34.4%, the S&P 500 Index ($SPX) saw an increase of nearly 23%. In contrast, year-to-date performance reveals a different story for PWR, which is down 11%, compared to the S&P 500’s 4% gain.

Comparative Analysis Against Industry Peers

Taking a closer look, Quanta has exceeded the 17.2% return of the Industrial Select Sector SPDR Fund (XLI) over the past year; however, it has lagged behind XLI’s 4.6% year-to-date performance.

Driving Factors for Performance

The company’s recent success can largely be attributed to the rising demand for energy infrastructure and grid modernization. Moreover, supportive federal policies like the Inflation Reduction Act and state-level renewable energy mandates have fueled its growth trajectory.

Earnings Report Insights

Despite the positive developments, PWR shares dropped 3.7% on February 20 following the release of its fourth-quarter earnings. The adjusted earnings per share (EPS) rose 44.1% to $2.94 compared to the same quarter last year, surpassing Wall Street’s estimate of $2.64. However, revenue grew by 13.3% year-over-year to $6.6 billion, which fell short of consensus expectations by 1.2%.

Lower revenues from its Renewable Energy Infrastructure and Underground Utility and Infrastructure Solutions segments partially impacted its strong performance, leading to the revenue miss. Nevertheless, Quanta remains optimistic about fiscal 2025, predicting revenues between $26.6 billion and $27.1 billion and adjusted EPS in the range of $9.90 to $10.50.

Analyst Expectations for 2023

For the current fiscal year, which ends in December, analysts anticipate a 13.8% increase in Quanta’s EPS, projecting it to reach $9.34. The company’s history of earnings surprises is varied, with three out of the last four quarters exceeding Wall Street estimates.

Analyst Ratings and Price Targets

Among 21 analysts tracking the stock, the consensus rating is a “Strong Buy,” supported by 16 “Strong Buy” and five “Hold” ratings. This is a slight improvement compared to three months ago, when only 14 analysts recommended a “Strong Buy.”

On January 30, BofA reiterated its “Buy” rating on PWR but lowered its price target to $355, indicating a possible upside of 26.3% from current levels. The average price target stands at $349.84, suggesting a 24.4% potential rise, while the highest target at $398 implies a possible increase of 41.5%.

On the date of publication, Neharika Jain did not hold positions in any of the securities mentioned in this article. All information and data are for informational purposes only. For more information, please refer to the Barchart Disclosure Policy here.

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The views expressed here are those of the author and do not necessarily reflect those of Nasdaq, Inc.