MTZ - Embedded Expectations Analysis - 2020 03 09
MasTec, Inc. (MTZ:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 16.0x Uniform P/E, implying bearish expectations for the firm. While management's concerns about growth opportunities, 5G spending, and margins suggest the potential for near-term headwinds, given secular Communications and Energy industry tailwinds, longer-term outperformance and equity upside remain warrantedSpecifically, management may be exaggerating their growth opportunities in the Communications market and across large projects, their capital structure flexibility, and their ability to meet record performance expectations. Moreover, they may be concerned about delays in T-Mobile's capex spending during its Sprint merger, lower-than anticipated 5G spending, and revenue seasonality. In addition, they may lack confidence in their ability to maintain backlog levels in their Electric Transmission segment, continue earnings outperformance, and improve margins by focusing on utilization and project mix. Management may also be exaggerating the progress of their pending projects, the benefits of their contract structures, and their ability to capitalize on evolving market trends, particularly in Communications
However, longer-term Communications and Energy industry tailwinds provide the potential for significant outperformance and equity upside going forward
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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