Everywhere you look, there are signs that the electrical utility industry is finally ready and able to spend money on its own infrastructure. Companies like TXU
In the meantime, it's not as though current performance is bad. Revenue was up 17% this quarter and margins expanded notably, paving the way for a better-than-tripling of operating income and near-doubling of EBITDA.
Business in the telecom and cable segment continues to get a lift from both a desire from providers to roll out higher-value services and willingness from local/state governments to facilitate the process. AT&T and Verizon
Utilities continue to be the main driver, though, and about two-thirds of the revenue base. To that end, utilities like Allegheny have been applying for rate hikes to cover the cost of improving their networks. Keep in mind, though, that this will be a multi-year (and perhaps even multi-decade) process, as the pace will be constrained by not only budgets and regulatory relief, but also by contractor and equipment availability.
Quanta is not an especially easy stock to value. You have to make some very aggressive growth assumptions to arrive at an appealing valuation, but if this quarter's growth can be continued, that aggressive growth isn't necessarily unrealistic. What's more, we're heading into the hurricane season, and that can sometimes attract even more attention to these kinds of companies.
For more constructive Foolishness:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).