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MasTec (MTZ) Gears Up for Q1 Earnings: What's in the Cards?

Zacks Equity Research

MasTec, Inc. MTZ is scheduled to report first-quarter 2020 results on Apr 30, after the closing bell.

In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 3.2% but revenues missed the same by 2%. Earnings of this infrastructure construction company grew 21.5% from the year-ago level but revenues declined 10.5%.

MasTec reported better-than-expected earnings in all the last four quarters, with the average surprise being 21.8%.

Trend in Estimate Revision

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has declined 4.3% to 45 cents per share over the past 30 days. This indicates a 22.4% decrease from the year-ago earnings of 58 cents per share. The consensus mark for revenues is $1.32 billion, suggesting a 13.1% year-over-year decline.

MasTec, Inc. Price and EPS Surprise

MasTec, Inc. Price and EPS Surprise
MasTec, Inc. Price and EPS Surprise

MasTec, Inc. price-eps-surprise | MasTec, Inc. Quote

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Factors to Note

The absence of a large project in the Oil & Gas business is expected to reflect on MasTec’s first-quarter results. Deterioration in market conditions and several midstream capex cuts might have weighed on Oil & Gas revenues that accounts for 43.4% of total revenues.

On the positive side, the Communications segment — accounting for 36.5% of revenues — is expected to have benefited from continued expansion of fiber optic networks, investments in wireless network capacity and 5G-related work. That said, the coronavirus outbreak caused disruptions of core wireless/wireline operations.

MasTec has been strongly focusing on its acquisition strategy. This is likely to have contributed to first-quarter revenues to some extent. During 2019, it completed six acquisitions, one under the Oil and Gas segment and Power Generation and Industrial segment each, and four within the Communications segment. The company’s revenues are expected to have benefited from these buyouts.

During fourth-quarter earnings call, MasTec had provided guidance for first-quarter 2020. It expects revenues for first-quarter 2020 to be $1.3 billion, indicating a decline from $1.52 billion reported a year ago. Adjusted EBITDA is expected to be $108 million, with margin forecast of 8.3%. This implies fall from the year-ago respective figures of $140.1 million and 9.2%. Adjusted earnings per share (excluding intangible asset amortization expense) are anticipated to be 48 cents, indicating a decline of 22.6% from 62 cents reported in the comparable prior-year period.

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for MasTec this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here, as you will see below.

Earnings ESP: MasTec has an Earnings ESP of -5.13%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: It currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Worth a Look

Here are some companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.

Masco Corporation MAS has an Earnings ESP of +10.73% and carries a Zacks Rank #3.

frontdoor, inc. FTDR has an Earnings ESP of +9.76% and holds a Zacks Rank #3.

Rayonier Inc. RYN has an Earnings ESP of +5.00% and carries a Zacks Rank #3.

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