MasTec: The Beat (And Raise) Goes On

Aug. 16, 2019 12:41 PM ETMasTec, Inc. (MTZ)6 Comments
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  • MasTec recently reported Q2 2019 results that beat the top- and bottom-line estimates. Additionally, management raised their full-year 2019 guidance.
  • This company is in a position to benefit from several major industry trends/tailwinds, which makes it well-positioned for 2019 and beyond.
  • I plan to stay long MTZ shares for the foreseeable 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 »

On August 1, 2019, MasTec (NYSE:MTZ) reported better-than-expected Q2 2019 results and management [again] raised their full-year guidance. As you can expect, the results were well-received by the market which added to the already impressive stock performance for MTZ so far in 2019.

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As I recently described, there have been legitimate reasons to stay long MasTec, and, in my opinion, the Q2 2019 results (and management's commentary) support the thought that this small-cap infrastructure company still has promising business prospects.

The Latest, Q2 2019

MasTec reported Q2 2019 operating results that beat the top- and bottom-line estimates. The company reported GAAP quarterly EPS of $1.58 (beat by an impressive $0.48) on revenue of $1.94B (beat by $140M), which also compares favorably to the year-ago quarter.

Source: Q2 2019 10-Q

Highlights from the quarter:

  • Revenue grew by ~20% YoY with the Oil & Gas (21.8%) and Power Generation & Industrial (71.4%) segments being the biggest contributors to the company's top-line growth.
  • Net income grew by 50% to $120M and the company's adjusted EBITDA came in at $240.7M (YoY growth of ~26%).
  • The 18-month backlog now stands at $7.8B, higher by ~$50M when compared to the year-ago quarter.

There is a lot to like about MasTec's Q2 2019 results as each of the company's operating segments reported YoY top-line growth with the O&G leading the charge from an earnings perspective.

Source: Q2 2019 Earnings Presentation

The O&G segment has performed extremely well in the recent past after a few years of being a major drag on the company's consolidated operating results. Simply put, the heavy investments made during the industry downturn have really started to pay off over the last two-plus years.

Source: Q2 2019 Earnings Slides

And looking ahead, the prospects look just as promising as this operating

ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

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This article was written by

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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, T. 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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