Quanta Services Shares Plunged: What You Need to Know (MYRG, PWR)

Quanta Services Shares Plunged: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Quanta Services (NYSE: PWR ) shares fell 11% on Wednesday after the company announced earnings and a weak fourth-quarter guidance.

So what: Earnings per share of $0.30 were in line with expectations, but the company's fourth-quarter expectation of adjusted earnings per share from $0.23-$0.25 is below the current $0.29 estimate. Quanta is running into regulatory hurdles and low demand for transmission projects as electricity consumption is still below peak levels.

Now what: Quanta and competitor MYR Group (Nasdaq: MYRG ) have both seen weaker demand than investors expected from transmission projects in particular. Natural gas pipeline projects haven't picked up the slack because excess labor is squeezing margins for pipe builders. I don't see a reason to think demand will pick up anytime soon, so I'm cutting my losses and running.

Interested in more info on Quanta Services? Add it to your watchlist by clicking here.

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Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

The Fool owns shares of Quanta Services. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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