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Quanta Services (PWR) Q1 Earnings: What's In The Cards?

Published 05/01/2017, 10:42 PM
Updated 07/09/2023, 06:31 AM

Quanta Services, Inc. (NYSE:PWR) is slated to report first-quarter 2017 results before the opening bell on May 4.

Quanta Services has had a dismal earnings surprise history, with three misses and one in-line earnings over the trailing four quarters, for an average negative surprise of 17.3%. Last quarter, the company’s earnings missed the Zacks Consensus Estimate by 3.7%.

Let's see how things are shaping up for this announcement.

Factors to Consider

Quanta Services has been deriving strong benefits from its diligent three-pronged growth strategy. The strategy focuses on the timely delivery of projects, leveraging on its core business areas to expand in complementary service lines and venturing into new service lines as well. The company’s decentralized and entrepreneurial business model has aided in combating some of the most pressing macroeconomic challenges.

Quanta Services’ thriving engineering and project management services are expected to boost its revenues for the soon-to-be-reported quarter. Of late, the company has been witnessing a solid rebound in its end markets, on the back of key growth drivers, like an aging grid, shifting generation mix and implementation of clean energy initiatives. Especially, the North American electric transmission and distribution markets have been investing huge amounts in transmission, and distribution upgrades, in a bid to improve system reliability and deliver renewable electricity.

Moreover, the company is currently pursuing several high-voltage electric transmission award opportunities, amid substantial bidding activity, in Australia, Canada and the U.S. We believe that these positive industry trends will act as major growth catalysts for the quarter to be reported.

This apart, robust pipeline projects in the oil and gas sector, supported by active bidding and negotiating environment, can also act as huge profit churners for the top line in the first quarter. In addition, Quanta Services’ previously completed acquisitions are likely to contribute significantly to the Electric Power Infrastructure Services segment’s top line.

Over the past one year, Quanta Services recorded an average return of 48.9%, more than double of the Zacks categorized Engineering/R&D Services industry's return of 12.2% over the same time period.

However, Quanta Services has been grappling with adverse weather conditions in recent times. In the last reported quarter, the company’s revenue growth was affected by regulatory delays on some large mainline pipe projects and fluctuations in timing of large projects. Also, unfavorable timing of revenues and corresponding income contributions of certain projects remain concerns for the company’s operational results.

Further, the initial optimism surrounding Donald Trump's infrastructure plan seems to have waned, as worries grow about the feasibility of the plan. The plan to improve America's infrastructure could have provided a welcome boost to Quanta Services’ operations and profitability.

Quanta Services, Inc. Price, Consensus and EPS Surprise

Earnings Whispers

Our proven model does not conclusively show that Quanta Services will beat earnings estimates in this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Zacks ESP: Earnings ESP for the company is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 38 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Quanta Services’ Zacks Rank #3, when combined with 0.00% ESP, makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

PBF Logistics L.P. (NYSE:PBFX) has an Earnings ESP of +10.91% and a Zacks Rank #1. The partnership is expected to release earnings results on May 4. You can see the complete list of today’s Zacks #1 Rank stocks here.

Global Partners L.P. (NYSE:GLP) has an Earnings ESP of +233.33% and a Zacks Rank #1. The partnership is anticipated to release earnings on May 9.

NOW Inc. (NYSE:DNOW) has an Earnings ESP of +17.39% and a Zacks Rank #2. The company is likely to release earnings on May 3.

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PBF Logistics LP (PBFX): Free Stock Analysis Report

Quanta Services, Inc. (PWR): Free Stock Analysis Report

NOW Inc. (DNOW): Free Stock Analysis Report

Global Partners LP (GLP): Free Stock Analysis Report

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