MasTec: Movin' On Up

Nov. 09, 2018 11:17 AM ETMasTec, Inc. (MTZ)5 Comments
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WG Investment Research


  • It was announced that MasTec was added to the S&P MidCap 400 index and the stock jumped on the news.
  • MasTec is movin' on up to the MidCap index but, in my opinion, this is only one of the many reasons to stay long the stock.
  • I am long MasTec and I am looking to add to my position.
  • This idea was discussed in more depth with members of my private investing community, Going Long With W.G.. Start your free trial today »

MasTec's (NYSE:MTZ) stock moved higher after it was announced that the company would be included in the S&P MidCap 400 index, which added to the already impressive stock performance so far in 2018.

ChartMTZ data by YCharts

The inclusion in the MidCap 400 index is great news for MasTec (and its shareholders) but let's remember that there are already plenty of other reasons to stay long the stock.

The Bull Case Remains Intact

As I previously described in "MasTec Has Promising Long-term Business Prospects," this small-cap infrastructure company has a great story to tell. Management has consistently talked up MasTec's long-term prospects but, more recently, they have also communicated the fact that the company should benefit from its improving backdrop in the near term too.

Source: MasTec Investor Presentation, November 2018

It also helps that the company's recent operating results support the bull case.

Latest Results

For Q3 2018, MasTec reported better-than-expected adjusted EPS of $1.33 (vs. $1.26 estimate) on revenue of $1.98B. For comparison purposes, the company reported adjusted EPS of $0.82 on revenues of $1.96B in the same period of the prior year.

Source: Q3 2018 10-Q

Operationally, MasTec benefits from several positive trends during the quarter as shown by the fact that all but one business segment reported YoY top line growth.

The Oil & Gas segment had a tough quarter again but, as described by management during the conference call, the segment's pipeline is strong (the O&G backlog increased 148% YoY) and the company is well-positioned for the end of 2018. As such, the next few years is shaping up to be better than the last two years for MasTec's largest operating segment.

Other highlights for the quarter include:

  • The quarterly revenue, EBITDA, net income and backlog ($7.8B) were record results for the company.
  • The company
ChartMTZ PE Ratio (Forward) data by YCharts

This article was written by

WG Investment Research profile picture
Our President and CIO is a CPA with experience in public accounting and the financial services industry. He earned his Master of Accountancy degree in 2008 and his B.S. in Business Management in 2007. He is also a Level III CFA candidate. He has been intrigued by the market from the start. Over the years, he has learned that long-term investing is a discipline that, if followed, will help contribute to building lasting wealth. As such, most of our articles will be about the investments that we plan to hold for at least 3 to 5 years, as long as the company's story does not change. As a Seeking Alpha contributor, our main goal is to write about the companies that are key to our portfolio with the hope of promoting discussion (for or against the investment) from others within the SA community.Please visit our website for more information about W.G. Investment Research LLC.

Disclosure: I am/we are long MTZ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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