MasTec is positioning itself to become a market leader in the shift to renewable energy.
The company is fueling growth through acquisitions and is maintaining enough equity to outpace its debts.
MasTec appears to be overvalued now, but the extreme volatility of the industries it operates in could unlock opportunities to buy if prices drop.
This article tells what investors could likely make in the future with MasTec and what the real value is versus the current share price.
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Sergey Pakulin/iStock via Getty Images MasTec (NYSE: MTZ ) has been working to diversify away from the oil and gas pipeline business with two acquisitions in 2021. MasTec announced the largest takeover in its history , buying Henkels & McCoy for $600 million. The purchase of Henkels, which specializes in electrical power transmission and distribution services, marked a significant change in the MasTec’s revenue structure. MasTec expects power transmission and distribution revenue to surpass fossil fuel pipeline income for the first time in the company’s history.
MasTec also acquired INTREN, another utility services provider specializing in electrical distribution network services. In its announcement of the purchase, MasTec reinforced the need to grow its electric utility transmission business as the country works to improve the infrastructure needed to power the growing number of electric vehicles.
When considering these current stories about MasTec, we need to determine which news topics will have a long-term and ongoing effect on the company and its share price. The strategic transition of MasTec’s operating revenue away from oil and gas and toward renewables will have a long-term impact on both expenditures and income.
While current news stories, good or bad, can sway our opinion about investing in a company, it’s good to analyze the fundamentals of the company and to see where it’s been in the past and in which direction it’s heading.
This article will focus on the long-term fundamentals of the company, which tend to give us a better picture of the company as a viable investment. I also analyze the value of the company versus the price and help you to determine if MTZ is currently trading at a bargain price. I provide various situations which help estimate the company’s future returns. In closing, I will tell you my personal opinion about whether I’m interested in taking a position in this company and why. Snapshot of the Company
A fast way for me to get an overall understanding of the condition of the business is to use the BTMA Stock Analyzer’s company rating score. It shows a score of around 71/100. Therefore, MasTec is considered to be a good company to invest in, since 70 is the lowest good company score. MTZ has high scores for 10 Year Price Per Share, ROE, and Ability to Recover from a Market Crash or Downturn. It has mediocre scores for Earnings per share, and ROIC. It has low scores for Gross Margin Percent, and PEG Ratio. A low PEG Ratio score indicates that the company may not be experiencing high growth consistently over the past 5 years. In summary, these findings show us that MTZ seems to have above average fundamentals.
Before jumping to conclusions, we’ll have to look closer into individual categories to see what’s going on. BTMA Stock Analyzer Fundamentals
Let’s examine the price per share history first. In the chart below, we can see that price per share has been mostly consistent at increasing over the last 10 years, with the exception of 2016 and 2021 where share price declined. Overall, share price average has grown by about 411% over the past 10 years or a Compound Annual Growth Rate of 19.87%. This is an impressive return for this period. BTMA Stock Analyzer Earnings
Looking closer at earnings history, we see that earnings haven’t grown consistently over the past 10 years. Earnings grew marginally from 2011 to 2013. Earnings then dipped slightly in 2014 before the company posted an earnings loss in 2015. EPS rebounded in 2016 and 2017 before falling again in 2018. While earnings recovered in 2019, they decreased again in 2020. MasTec’s fluctuating earnings can, in part, be explained by the revenue streams the company depends on for earnings.
The company has been moving to quickly diversify away from being primarily an oil and gas business, which is an industry that is notoriously linked to the volatility […]