Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Promises, promises -- don't knock promises. When Quanta Services
So what: According to management, Quanta's on track to earn adjusted profits of $0.80 to $0.90 in fiscal Q3, versus analyst estimates of only $0.69 per share -- 23% better than expected.
Now what: Management feels confident making these promises based on a hunch that the company is on "on the verge of a significant growth cycle" -- and it had better be right if it's to justify its valuation. Right now, post-stock-jump, Quanta shares sell for nearly 36 times earnings. Analysts are looking for only 12.6% annual growth out of Quanta over the next five years, which suggests pretty severe overvaluation in the shares. Honestly, I'm not sure even doing 23% better than expected will be enough to make Quanta a promising investment.
Think Quanta can pull it off? Add it to your Fool Watchlist and find out.