Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of MasTec Fell Today

By Lou Whiteman - Mar 9, 2020 at 4:45PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The infrastructure specialist was hit by weakness in the oil sector and fears of a broader downturn.

What happened

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.

So what

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.

Utility transmission lines.

Image source: Getty Images.

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.

Now what

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

MasTec, Inc. Stock Quote
MasTec, Inc.
MTZ
$71.66 (0.51%) $0.36

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
317%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.