On Jul 11, 2014, we issued an updated research report on
), a leading infrastructure construction company operating
throughout the United States.
MasTec's first-quarter earnings declined 28% year over year to 21
cents per share. The results were adversely affected by a severe
winter, which caused disruptions in business. However, the reported
figure surpassed the Zacks Consensus Estimate of 18 cents per share
as well management's expected earnings per share of 20 cents.
During the first quarter conference call, MasTec had discussed its
second quarter guidance. For the second quarter of 2014, the
company had projected revenues in the range of around $1.15 billion
to $1.20 billion and earnings per share from continuing operations
was expected to be around 53 cents. Subsequently in June, MasTec
reduced its second quarter earnings per share guidance to 40 cents
and also cut revenue guidance to around $1.1 billion.
The trimmed outlook reflects unexpected delays in wireless project
spending and weaker than expected performance at the oil and gas
segment. MasTec expects wireless project revenues to decline in the
second quarter as various planned projects were deferred and or
reduced in scope.
These unexpected revenue declines will negatively affect segment
results representing the effect of reduced absorption of
non-variable indirect and overhead costs. In addition, the company
foresees that additional changes to levels of second half 2014
wireless project spending may also occur, although the level of
potential changes cannot yet be estimated.
At the oil and gas segment, the company expects weaker results due
to delays in project start up during the quarter. Pricing pressure
on current quarter short-term, mid-stream pipeline activity will
also hurt the results. Even though management anticipates oil and
gas revenue levels to grow year over year, it will be lower than
previous expectations, impacting anticipated second quarter oil and
gas segment revenues by about $25-$30 million.
As of first quarter end, MasTec's cash and cash equivalents
amounted to $9 million, down substantially from $23 million as of
fiscal 2013 end. Cash used in operating activities was $20.4
million in the first quarter compared with cash provided by
operating activities of $26 million in the prior-year quarter.
Decreased productivity and delay in the billing and collection
process caused the year-over-year decline in cash flow.
MasTec is scheduled to release its second-quarter earnings results
after the market closes on Monday, Aug 11, 2014. The Zacks
Consensus Estimate for the quarter is currently pegged at 37 cents,
reflecting a 15.34% year-over-year decline and lower than the
company's guidance. In fact the Zacks Consensus Estimate has gone
down 26% to 37 cents in the past 60 days due to disappointing
earnings as well as reduced guidance.
Other Stocks to Consider
At present, MasTec has a Zacks Rank #5 (Strong Sell). Some
better-ranked stocks in the building and heavy construction
Simpson Manufacturing Co., Inc.
Quanex Building Products Corp.
United Rentals, Inc.
). While Simpson Manufacturing sport a Zacks Rank #1 (Strong Buy),
Quanex Building Products and United Rentals carry a Zacks Rank #2
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