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MasTec, Inc. (NYSE:MTZ) is set to report earnings after the market closes Monday, March 2nd. MasTec is a leading specialty contractor for communications companies, utilities and governments throughout the United States. MasTec designs, builds, installs, maintains and upgrades infrastructure that is the backbone of the nation’s economy – telephone, high-speed Internet, electric, water, sewer and natural gas – as well as provides installation and maintenance services for satellite and cable television services.

MTZ is expected to earn 25 cents for its 4th quarter. We expect the construction company to announce earnings that will slightly beat investors’ and analysts’ expectations. MasTec has topped consensus estimates 6 quarters in a row and we believe they will make it a lucky 7. Management called MTZ’s 3rd quarter “our best quarter in years and a true indication of our improvement and success.”

This is very much a company that can benefit from the spendulus bill, as wind power accounts for 10% of MasTec’s revenue. That’s up from 0% to start the year. We expect to see continued growth in wind and to get clarity on what management expects from a new agreement that began in February. MasTec says they are “very excited and encouraged by the recently announced new relationship between AT&T and DirecTV which starts in February and which we feel will have a significant impact not only on our old Bellsouth territories but also in additional AT&T markets that we cover that have never had equal marketing arrangement.”

Fundamentally, this is a company that appears to be in good health. MTZ trades at a just 8.45 times next years’ expected earnings; not bad for a company projected to grow at a 15% clip. Trading at only .51 times sales and just 1.75 book value, MasTec’s shares have plenty of room to move with a return on equity of 17.18% . Add in a PEG ratio of under 1 and easy to see value here.

We have identified a interesting way to trade MasTec for its earnings. We suggest a covered call strategy as a possibility. The stock closed at $9.38 last night. Every 1000 shares would be a $9,380 investment not including commission. The March 10 calls last traded at $0.70 per contract. Investors who buy the stock and then write or sell the call options will bring in around $700 per thousand shares. That’s about a 7.5% premium. If the stock closes at 10 or above on March the 20th, you might be obligated to sell your shares at $10 for roughly a $600 gain. Six hundred plus $700 is a total of possible $1,300 or almost 14% in just 20 trading days, not too bad in this market. If the stock trades flat or down, you keep the $700. Your breakeven point if the stock should falter is $8.68, which is where we suggest you put in your stops.

Source: MasTec Earnings Preview