Electric and gas infrastructure contractor Quanta Services (NYSE:PWR) stock has been surging on being a big benefactor of infrastructure spending. The modernization and hardening of power grids play favorably into the core services offered by Quanta. Shares have hit a perfect storm of sorts with power and energy grids, renewable energy, and electric vehicle charging installation infrastructure tailwinds and themes. The Company is operating on all cylinders especially with the much anticipated federal infrastructure bill set to finalize in the coming weeks. The reopening and repopulating of offices and commuters returning to work is a boon to Quanta in the post-pandemic new normal. Prudent investors seeking a play in the energy and power infrastructure improvement segment can watch for opportunistic pullbacks in shares of Quanta Services.
Q2 FY 2021 Earnings Release
On Aug 5, 2021, Quanta released its fiscal second-quarter 2021 results for the quarter ending June 2021. The Company reported an earnings-per-share (EPS) profit of $0.81 excluding non-recurring items versus $0.52 per share EPS is year ago same period. Revenues rose to $3 billion, up from $2.5 billion in the year-ago quarter. Adjusted diluted EPS was $1.06 compared to $0.74 in the year-ago period. Quanta Services CEO Duke Austin commented:
"Quanta generated record second-quarter revenues, net income, adjusted EBITDA and earnings per share, led by the solid performance and safe execution from our Electric Power Infrastructure Solutions segment. Backlog of $17.0 billion at the end of the quarter set another record, reflecting our collaborative approach with customers and the growth of programmatic spending with existing and new customers. Our customers' multi-year programs to modernize and harden utility infrastructure, along with their efforts to achieve carbon-neutrality through increased renewable generation investment and electrification trends such as electric vehicles (EV), continue to drive demand for our services and present incremental growth opportunities. These opportunities include large, multi-year master services agreements, larger high-voltage electric transmission projects and large-scale EV infrastructure program engagements. These dynamics, coupled with active broadband and 5G network deployments and the opportunity for recovery of certain operations that have been affected by the global pandemic, give us a positive outlook for the remainder of this year and the belief that our business and opportunities for profitable growth in 2022 and beyond are gaining momentum."
Conference Call Takeaways
CEO Austin set the tone:
“This morning, we reported solid results with record second quarter revenues and earnings per share. Backlog of $17 billion at the end of the quarter was also a record, which we believe reflects the benefits of our collaborative approach with customers and the continued advancement of our long-term growth strategies. We continue to see opportunities for multiyear growth across our service lines driven by our solution-based approach and the growth of programmatic spending with existing and new customers.”
Electric Utilities and Renewables Infrastructure
CEO Duke talked about the utilities:
“Electric utilities in other areas of the country are also pursuing initiatives to underground critical infrastructure. Examples include electric transmission projects in the Northeast, distribution circuits along the coast lines, electric transmission line projects for offshore wind generation and undergrounding transmission and distribution initiatives by other utilities in California. Many of these initiatives are part of a large-scale, multiyear system hardening programs, which provide meaningful opportunities for Quanta. We continue to see accelerated renewable generation development and associated demand for our services, including transmission interconnects, substations, and energy storage. Our customers continue to advance their efforts to achieve carbon neutrality, in large part through increasing renewable generation investments. For example, we have begun work on what will become the largest solar power battery storage center in the world for a long-standing utility customer. We believe public policy and the positive general sentiment supporting a greener environment will drive North America's power generation mix increasingly towards renewables over the near and longer term. And as these dynamics continue to advance, demand for our services could accelerate.”
Electric Vehicle Install Infrastructure
CEO Duke continued:
“Additionally, we are experiencing accelerating activity and opportunities for our electric vehicle infrastructure installation and program management capabilities. We are in active discussions with several industry participants about managing the deployment of thousands of charging stations, both regionally and nationally. These are exciting and meaningful prospects but just part of the equation in our view. More importantly, we feel the market is underestimating the significant investment needed to modernize and expand the capacity of the electric distribution system to accommodate the mass deployment of retail and commercial fleet electric vehicle charging infrastructure.”
PWR Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provide a precision view of the price action playing field for PWR stock. The weekly rifle chart exploded higher on earnings reaction as it peaked off the $117.21 Fibonacci (fib) level forming a weekly doji. The weekly 5-period moving average (MA) is rising at $105.78. The weekly market structure low (MSL) triggered on the breakout through $$93.14. The weekly upper Bollinger Bands (BBs) sit at $116.37. The weekly stochastic is rising through the 80-band. The daily rifle chart is uptrending with a rising 5-period MA that is starting to stall out at $115.45. The daily 15-period MA is rising at $106.57 and upper BBs sit at $124.30. The daily stochastic is attempting a high band mini pup. Prudent investors can watch for opportunistic pullback levels at the $108.72 fib, $104.29 fib, $100.40 fib, $97.06 fib, $93.87 fib, $89.28 fib, and the $85.90 fib. The upside trajectories range from the $122.79 fib up to the $137.64 price level.