MasTec, Inc. (MTZ) stock has experienced a significant surge in recent months, gaining almost 31% in the past six months, eclipsing the performance of its peers and the broader market. This infrastructure construction company’s impressive growth trajectory is fueled by its strategic positioning to meet increasing demand for power, data capacity, and network speed, coupled with a focus on diversifying its portfolio through strategic investments. As MasTec leverages its strong backlog, robust growth projections, and expanding communications pipeline, analysts are increasingly optimistic about the company’s future prospects, solidifying its position as a potential investment gem.
MasTec, Inc. (MTZ) stock has experienced a significant surge in recent months, gaining almost 31% in the past six months, eclipsing the performance of its peers and the broader market. This infrastructure construction company’s impressive growth trajectory is fueled by its strategic positioning to meet increasing demand for power, data capacity, and network speed, coupled with a focus on diversifying its portfolio through strategic investments. As MasTec leverages its strong backlog, robust growth projections, and expanding communications pipeline, analysts are increasingly optimistic about the company’s future prospects, solidifying its position as a potential investment gem.
Key Takeaways:
MasTec outperforms the market: MTZ stock has surged 31% in the last six months, exceeding the Zacks Building Products – Heavy Construction industry’s 24.5% growth, the broader Construction sector’s 7.2% increase, and the S&P 500’s 8.6% rise.
Strong demand and strategic investments: MasTec capitalizes on the growing demand for power, data capacity, and network speed. Strategic investments further bolster its position to capitalize on global infrastructure development.
- Robust outlook for 2024 and beyond: MasTec’s $13.3 billion backlog provides strong visibility into the future. The company has raised its full-year guidance, expecting consolidated revenues of $12.4 billion in 2024 with continued growth expected beyond.
What’s Fueling MTZ Stock’s Outperformance?
H2: Strong Outlook for 2024
MasTec’s strong performance is underpinned by its robust 18-month backlog of $13.3 billion, offering significant visibility into 2024 and beyond. This robust backlog translates to projected consolidated revenues of $12.4 billion in 2024, exceeding $12 billion year-over-year. The company also anticipates adjusted EBITDA to reach $975 million, a significant increase from $860.3 million in 2023, with an improved margin of 7.9% (up from 7.8% expected earlier and 7.2% reported in 2023).
MasTec’s Clean Energy and Infrastructure segment is expected to experience robust growth, projected to reach $4.4 billion in revenues in 2024 — a 10% increase from the previous year. This segment is poised for continued growth beyond 2024, reflecting the rising demand for renewable energy and infrastructure projects.
H2: Solid Backlog Sets the Stage for Future Growth
As of June 30, 2024, MasTec’s Clean Energy and Infrastructure backlog saw impressive year-over-year growth of 10.3% and a sequential increase of 4.6%. This robust backlog is further solidified by a 1.2x book-to-bill ratio, providing a strong indicator of future project opportunities.
The Power Delivery segment experienced a significant 12% year-over-year increase and a substantial 20% sequential growth in its backlog. This is driven in part by a substantial 700-mile high-voltage transmission project commencing in 2025. This project, one of the largest in the U.S., is poised to generate $300-$500 million annually until 2028, positioning this segment for significant growth.
The Communications segment also saw a 1.7% sequential increase and an 8.8% year-over-year backlog growth, with revenues expected to rise by 4.5% in 2024. The company maintains strong adjusted EBITDA margins in the high single digits, indicating its ability to effectively manage costs and maximize profits.
MasTec is optimistic about its growth opportunities and anticipates double-digit revenue and earnings growth in 2025 and beyond. This optimism is underpinned by the anticipated robust demand for its services, particularly in renewables and infrastructure projects.
H2: Expanding Communications Pipeline Boosts Growth Prospects
MasTec’s growing communications pipeline, particularly its strengthened relationship with AT&T, its largest wireless client, is a significant driver of growth. AT&T has expanded the scope and geographic reach of MasTec’s core wireless services, leading to a significant increase in MasTec’s wireless business. This, coupled with AT&T’s plan to transition from Nokia to Ericsson equipment over the next five years, is expected to generate substantial revenue growth for MasTec, particularly in the second half of 2024 and into 2025.
MasTec anticipates nearly 20% organic revenue growth in the second half of 2024, propelled by the growing demand for wireline services and the anticipated BEAD (Broadband Equity, Access, and Deployment) program funding, which provides long-term visibility.
New customers, including private equity-backed entrants, are increasingly attracted to MasTec’s comprehensive solutions, bolstering its growth prospects in 2025 and beyond.
H2: Strategic Acquisitions & Equity Investments Fuel Portfolio Diversification
MasTec remains committed to strategic acquisitions and equity investments to further diversify its portfolio and open new avenues for growth. The company completed four acquisitions in 2023 and five in 2022, demonstrating its commitment to expanding its reach and capabilities.
MasTec also maintains equity stakes in various telecommunications entities that provide construction services to the company. As of March 31, 2024, MasTec had $22 million in total investments, including $18 million allocated to FM Tech, and holds 49% equity interests in entities within its Communications and Power Delivery segments. This strategic approach allows MasTec to diversify its revenue streams and increase its agility within rapidly evolving industries.
H2: Other Parameters Point to MTZ’s Solid Growth Prospects
Analysts are increasingly bullish on MTZ, demonstrating confidence in the company’s future prospects with recent upward revisions in earnings estimates. Over the last 60 days, forecasts for 2024 have increased to $3.02 (from $2.94), while forecasts for 2025 have climbed to $4.35 (from $4.33). These upward revisions signify analyst confidence in the company’s ability to meet or even surpass its growth projections.
MasTec also boasts a solid earnings surprise history. The company has surpassed the consensus estimate in three of the trailing four quarters, only missing once, with an average surprise of 19.4%. This consistent record of exceeding expectations underscores its strong execution capabilities and ability to deliver positive outcomes.
Furthermore, MasTec’s VGM Score of A, a metric that considers growth, value, and momentum, signals its solid growth prospects and the potential to outperform the market in the near term.
H2: Is MasTec a Smart Investment Choice Today?
In the competitive non-residential services sector, MasTec stands out as a dominant player, strategically positioned to capitalize on converging trends, providing multiple avenues for profitable growth in the near and long term. Its diverse portfolio with significant growth potential in every segment solidifies MTZ as a smart investment choice for discerning investors looking to capitalize on the robust infrastructure and renewable energy construction markets.
The company’s upwardly revised earnings estimates further reinforce its strong fundamentals and reinforce its Zacks Rank #2 (Buy) rating. This combination of positive indicators strongly suggests that adding MTZ to one’s portfolio could be a strategic move for long-term growth and profitability.
