Quanta Services Arm Wins PPL Electric Deal - Analyst Blog

Par Electrical Contractors, Inc. PAR, a subsidiary of Quanta Services Company PWR, was awarded a contract by PPL Electric Utilities to deploy transmission infrastructure for the Northeast Pocono Reliability Project. Although no financial details were disclosed, Par Electrical has started working on the contract and expects to complete the project by May 2017.

The scope of contract requires PAR to install about 68 miles of 230-kilovolt and 138-kilovolt overhead transmission lines, erect steel transmission structures, install concrete foundations and construct and maintain access roads. The contract is likely to be included in Quanta's Electric Power Infrastructure Services segment which contributed 68.7% of the total revenue in 2013. This segment provides comprehensive network solutions to customers in the electric power industry.

Notably, Quanta Services is benefiting from increased spending in the Electric Power segment. The higher spending is directed toward project upgrades and deployment of electric power transmission infrastructure to improve system reliability and deliver renewable electricity from new sources to demand centers. The company is also seeing profits from aging electric infrastructure that requires increased maintenance spending to meet reliability standards. Also, the rapid adaptation of smart grid technology is expected to leverage the segment's business going forward. In the last reported first-quarter of 2014, revenues at the segment surged 8.5% driven by continued increase in demand for electric transmission and distribution services.

Quanta currently holds a Zacks Rank #2 (Buy). Some better-ranked stocks in the sector include Emcor Group Inc. EME, Sterling Construction Co. Inc. STRL and Tutor Perini Corporation TPC. All three carry a Zacks Rank #2 (Buy).