MasTec Upped to Strong Buy - Analyst Blog

On April 7, 2014, Zacks Investment Research upgraded MasTec, Inc. MTZ to a Zacks Rank #1 (Strong Buy). This was based on strong fourth-quarter results, record revenues and earnings for 2013 and a raised guidance.

Why the Upgrade?

Share price and earnings estimates for MasTec have been trending upward following the release of its fourth-quarter 2013 results on Feb 27. The company reported adjusted earnings of 53 cents per share, up 13% year over year and ahead of the Zacks Consensus Estimate.

For 2013, the company's adjusted earnings increased 25% year over year to a record $1.90, which beat the Zacks Consensus Estimate. Revenues also increased 16% year over year to $4.32 billion for the full year, surpassing the Zacks Consensus Estimate. Strong revenue growth across most segments drove the performance.

For 2014, MasTec expects revenues to be around $4.65 billion to $4.7 billion and adjusted earnings per share in the range of $2.27 to $2.30. For the first quarter of 2014, the company projected revenues of about $920 million and earnings per share of around 20 cents.

The company is witnessing strong momentum at its end markets. Going forward, we expect MasTec to benefit from growth opportunities, thereby boosting revenues and margins in the wireless, oil and gas pipeline, electrical transmission, fiber deployment and renewable power markets.

Notably, MasTec delivered positive earnings surprises in three of the last four quarters with an average beat of 6.33%. The long-term expected earnings growth rate for this stock is 8%.

Following the fourth-quarter earnings announcement, the Zacks Consensus Esimate for MasTec increased 3.3% to $2.20 per share for 2014 and by 11.8% to $2.65 per share for 2015.

Other Stocks to Consider

Some other stocks in the same sector that warrant a look include Gibraltar Industries, Inc. ROCK, United Rentals, Inc. URI and Nortek Inc. NTK. All of these have a Zacks Rank #2 (Buy).