Shares of MasTec (MTZ 0.51%) fell more than 18% on Monday despite a lack of company-specific news. A sharp drop in the price of oil put the stock under pressure, as did increasing worries that the COVID-19 coronavirus will push the U.S. economy into a recession.
MasTec is an infrastructure company, providing engineering, building, and maintenance services for the communications, energy, and utility segments. Oil and gas is a large part of that business, but a plunge in crude prices over the weekend -- if sustained -- would likely mean a suspension of some projects and a drop in funding for new production.
The company's infrastructure business could similarly be impacted if the U.S. falls into a recession, which typically causes customers to slow spending on new towers, transmission lines, and other projects.
Heading into 2020, MasTec had expected the second half of the year to be stronger than the first half, and if the coronavirus outbreak ebbs and oil prices rebound, there is at least a chance that things won't be as bad as feared. But on a broadly negative day for equities, investors were in no mood to hang around and hope for the best.
MasTec is well prepared for a downturn, with less than $1.7 billion in total debt and annual operating cash flow of more than $550 million. Investors shouldn't fret overmuch about the possibility of current macroeconomic woes driving MasTec to the point of distress, but it could still be a difficult few quarters for the construction company.