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A Strong Q1 Sends MasTec Shares Soaring 13% Early Friday

By Daniel Miller – Updated May 1, 2020 at 2:37PM

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The infrastructure construction company is well positioned to weather the COVID-19 storm.

What happened

Shares of MasTec (MTZ -4.17%), a leading infrastructure construction company, bucked broader market declines as they jumped 13% early Friday after the company released better-than-expected first-quarter results. By 3:28 p.m. EDT today, however, the stock had settled to a 3.6% gain.

So what

Revenue declined 6.6% from the prior year to $1.4 billion, but that was still better than analysts' estimates calling for $1.3 billion. Adjusted earnings per share checked in at $0.60, which was $0.12 higher than management's guidance and $0.14 higher than analysts' estimates. The culprit behind the company's sales decline is clear: The communications, electrical transmission, and power generation segments were up 5%, 35%, and 51%, respectively, while oil and gas declined 42%. More first-quarter bright spots were record cash flow from operations of $203 million, and a record backlog of $8.3 billion.

In a press release, CEO Jose Mas said: "As it relates to COVID-19, we've assessed and continue to manage the impact across all of our segments. We are closely monitoring the impact the pandemic is having on commodity prices and, in particular, how it is affecting demand." 

Gas pipeline infrastructure

Image source: Getty Images.

Now what

It was a strong first quarter, but investors can expect more impact from COVID-19's economic ripple effects during the second quarter. The good news is that the company's balance sheet is strong. It has roughly $950 million in liquidity, and with a record backlog it has significant revenue visibility for not only 2020, but also into 2021.

Management now expects full-year 2020 revenue to check in between $7.3 billion and $7.7 billion, ahead of analysts' consensus estimates of $7.31 billion. Adjusted EPS is forecast between $4.50 and $5, compared to analysts' estimate of $4.44.

Daniel Miller has no position in any of the stocks mentioned. The Motley Fool recommends MasTec. The Motley Fool has a disclosure policy.

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MasTec, Inc. Stock Quote
MasTec, Inc.
$72.94 (-4.17%) $-3.17

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