MasTec's 2018 Results: A Lot To Like Here

Mar. 04, 2019 3:57 PM ETMasTec, Inc. (MTZ)5 Comments
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WG Investment Research


  • MasTec reported Q4 2018 results that beat the top- and bottom-line estimates. Additionally, management raised their forward guidance due to the company's strong business prospects for 2019.
  • I believe that MasTec's stock is trading at attractive levels and that the company is well positioned for 2019 and beyond.
  • I'm long MTZ shares and I have no plans to reduce my stake in the near future.
  • 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 (NYSE:MTZ) reported blow out Q4 and full-year 2018 results, and the market liked what it heard, as shown by the fact that MTZ shares shot up by more than 8%. However, let's not get too excited because MasTec's stock is still underperforming the broader market by a wide margin over the last 52 weeks.

ChartData by YCharts

I recently provided three reasons why I thought that investors should stay long MasTec in a December 2018 article (i.e., the growing backlog, the capital return potential, and a change in investor sentiment) and, in my opinion, the Q4 and full-year 2018 results show that this small-cap infrastructure company still has promising business prospects. As such, investors with a time horizon longer than 2-to-3 years should seriously consider staying the course.

The Latest, A Lot To Like Here

On February 28, 2019, MasTec reported Q4 2018 operating results that beat the top- and bottom-line estimates. The company reported adjusted quarterly EPS of $1.07 (beat by $0.01) on revenue of $1.92B (beat by $20M), which also compares favorably to the year-ago quarter.

Source: Q4 and Full-year 2018 Earnings Press Release

Highlights from the quarter:

  • Revenue grew by ~20% YoY - as shown, the Oil & Gas ("O&G") and Power Generation and Industrial ("Power") segments were major contributors to the company's top-line growth.
  • Adjusted EPS increased by 127% YoY (to $1.07 from $0.47) and the adjusted EBITDA margin came in at 10.2% (an increase of 220 bps from the year-ago quarter).

2018 was a good year for MasTec (you could easily replace "good" with "great," in my opinion). However, the bears have raised a valid concern in that MasTec's O&G segment had a blow-out year in 2018 and that it's going to be hard to repeat that type of success in 2019. But, as management described

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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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