What happened
Electricity infrastructure stocks really came to life on Thursday after some leading companies released fourth-quarter earnings reports. For today, it looks like the thesis that higher infrastructure spending in the U.S. and abroad will have long-term tailwinds for the industry.
MYR Group's (MYRG 0.13%) stock jumped as much as 22.2% in early trading, Quanta Services (PWR 0.49%) was up 13.7%, and TPI Composites (TPIC -4.63%) was up 22.2%. Shares are trading 16.3%, 9.3%, and 13.1% higher, respectively, as of 11:45 a.m. ET.
So what
MYR's revenue jumped from $646 million a year ago to $864 million, and net income was $24.6 million, or $1.46 per share. Analysts were expecting just $1.05 per share in earnings. Management said transmission and distribution revenue grew 45.4% to $513.7 million, which dominated the improved results.
Quanta's revenue was up 12.6% to $4.42 billion and net income jumped from $106.3 million a year ago to $174.1 million, or $1.10 per share. Revenue beat estimates slightly and adjusted earnings per share of $1.68 beat estimates by $0.07.
TPI Composites saw revenue from all operations rise 18.6% to $461.8 million and net loss fell from $93.3 million a year ago to $57.8 million, or $1.38 per share. On an adjusted basis, the loss was $0.73 per share compared to analysts' estimate of an $0.80 loss, which is a big reason the stock is up today.
Now what
The theme across these companies is a boom in infrastructure spending both in the U.S. and around the world. That's driven by decades of underinvestment but also a transition to more renewable energy, helped by the passage of the Inflation Reduction Act (IRA). The IRA has given wind and solar energy developers more financial incentives to build in the U.S.
As much as the trends were positive in 2022, the pace of growth may slow in 2023. MYR Group said its backlog was $2.50 billion at the end of 2022, up from $1.79 billion a year ago but up only slightly from $2.48 billion at the end of September 2022. Quanta's backlog was $24.1 billion, up from $19.3 billion a year ago and $20.9 billion at the end of September.
It's clear that tailwinds are behind the industry, but keep in mind that results can be choppy. That said, I do think there was a lot to like in the results and this is an industry that should continue to grow long term. Whether it's increasing electrification or upgrading existing infrastructure, more investment is needed in electricity infrastructure and that will drive results higher for the foreseeable future.
