MTZ - Embedded Expectations Analysis - 2020 01 09
MasTec, Inc. (MTZ:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 15.8x Uniform P/E, implying bearish expectations for the firm. While management's concerns about backlog misses, cash flows, and their acquisition of QuadGen suggest the potential for near-term headwinds, given Communications and Energy industry tailwinds, longer-term outperformance and equity upside remain warrantedSpecifically, management may be concerned about backlog number misses and may lack confidence in their ability to capitalize on verbal awards in 2020. Moreover, they may lack confidence in their ability to improve cash flows and liquidity, meet record-level earnings guidance, and manage operating inefficiencies and financing lease costs. Furthermore, management may be concerned about their acquisition of QuadGen, the timing of their oil & gas segment ramp-up, and AT&T's future 5G infrastructure needs. Lastly, they may be exaggerating the impact of East and West Coast natural disasters on grid replacement, and they may be downplaying concerns about install business weakness
However, long-term Communications and Energy industry tailwinds provide significant potential for outperformance and equity upside
MasTec is an infrastructure construction company operating mainly throughout North America across a range of industries. The company's segments include: Communications, which performs engineering, construction, maintenance and customer fulfillment activities related to communications infrastructure; Oil and Gas, which performs engineering, construction and maintenance services on oil and natural gas pipelines and processing facilities; Electrical Transmission, which performs engineering, construction and maintenance of electrical transmission lines and substations; and Power Generation and Industrial, which performs installation and construction of power facilities.
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