/Quanta%20Services%2C%20Inc_%20logo%20on%20phone-by%20rafapress%20via%20Shutterstock.jpg)
Houston, Texas-based Quanta Services, Inc. (PWR) provides infrastructure solutions for the electric and gas utility, renewable energy, communications, and pipeline and energy industries. Valued at a market cap of $43.1 billion, the company has over 50,000 employees and is in all 50 states and more than 15 countries.
This construction engineering company’s shares have outperformed the broader market over the past 52 weeks. PWR has rallied 34.4% over this time frame, while the broader S&P 500 Index ($SPX) has gained nearly 23%. However, the stock is down 11% on a YTD basis, lagging behind SPX’s 4% rise during the same time frame.
Zooming in further, Quanta has outpaced the Industrial Select Sector SPDR Fund’s (XLI) 17.2% return over the past 52 weeks but has underperformed XLI’s 4.6% gain on a YTD basis.
Quanta’s outperformance over the past year can be primarily attributed to the growing demand for energy infrastructure and grid modernization and the company’s ability to capitalize on these trends. Federal policies, such as the Inflation Reduction Act, along with state-level renewable energy mandates, have further supported its growth.
However, on Feb. 20, PWR’s shares fell 3.7% after its Q4 earnings release as the company delivered a mixed performance. Its adjusted earnings of $2.94 per share increased 44.1% from the year-ago quarter and outpaced the Wall Street estimates of $2.64. However, its revenue, which also grew by 13.3% year-over-year to $6.6 billion, fell short of the consensus expectations by 1.2%.
A decline in revenues from its Renewable Energy Infrastructure and Underground Utility and Infrastructure Solutions segments somewhat affected its otherwise strong performance and contributed to the top-line miss. Nonetheless, on the brighter side, the company eyes solid fiscal 2025 growth and expects revenues between $26.6 billion and $27.1 billion. The company also projects adjusted EPS in the range of $9.90-$10.50.
For the current fiscal year, ending in December, analysts expect Quanta’s EPS to grow 13.8% year over year to $9.34. The company’s earnings surprise history is mixed. It exceeded the Wall Street estimates in three of the last four quarters while missing on another occasion.
Among the 21 analysts covering the stock, the consensus rating is a “Strong Buy,” which is based on 16 “Strong Buy” and five “Hold” ratings.
This configuration is modestly more bullish than three months ago, with 14 analysts suggesting a “Strong Buy” rating.
On Jan. 30, BofA maintained a “Buy” rating on PWR and lowered its price target to $355, which indicates a 26.3% potential upside from the current levels.
The mean price target of $349.84 represents a 24.4% upside from Quanta’s current price levels, while the Street-high price target of $398 suggests an upside potential of 41.5%.
