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MasTec, Inc. (MTZ): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

By: Zacks.com
Posted: 4/11/2014 8:00:00 AM
Referenced Stocks: MTZ

Summary:
MasTec's adjusted earnings declined 10% year over year to $0.53 per share in the third-quarter 2014. Earnings were in line with the Zacks Consensus Estimate but below management's guidance of $0.56. For 2014, MasTec raised revenue guidance to $4.6 billion. The company revised adjusted earnings outlook to $1.55 per share. MasTec also expects to incur acquisition integration costs of roughly $20 million over the next several quarters. The company expects wireless project activity to slow further in the fourth quarter. Moreover, unexpected delays in wireless project spending remain headwind in the near future. Thus we maintain our Underperform recommendation on MasTec with a target price of $25.

Overview:

MasTec, Inc. (MTZ) is a leading infrastructure construction company operating throughout the United States. The company engages in the building, installation, maintenance and upgrade of energy, communication and utility infrastructure. MasTec has been in operation for more than 80 years and currently has 380 locations with 13,450 employees.

MasTec caters to a wide range of industrial customers: utilities (including wind farms, solar farms and other renewable energy, natural gas gathering systems and pipeline infrastructure), communications (including wired and wireless telephony and satellite television) and government (including water, sewer and other utility and communications work on military bases.

MasTec's top 10 customers for the first quarter as a percentage of revenue were - AT&T (22%) Enbridge (14%) DIRECTV (14%), Duke Energy (5%), Energy Transfer Company (5%), MidAmerican Energy (4%), and ATCO Group, BHP Billiton, Starwood Energy and Talisman Energy each contributed 2% to the total revenue. MasTec reports its results under five segments focused on broad end-user markets Communications, Oil and Gas, Electrical Transmission, Power Generation and Industrial and Other.

Communications (46% of first quarter 2014 revenues): The segment performs engineering, construction and maintenance of communications infrastructure mainly related to wireless and wireline communications and install-to-the-home.

Oil and Gas (40%): The segment performs engineering, construction and maintenance services on oil and natural gas pipelines and processing facilities for the energy and utilities industries.

Electrical Transmission (8%): The segment primarily serves the energy and utility industries through the engineering, construction and maintenance of electrical transmission lines and substations.

Power Generation and Industrial (6%): The segment primarily serves the energy and utility end-markets and other end-markets through the installation and construction of conventional and renewable power plants, related electrical transmission infrastructure, ethanol facilities and various types of industrial infrastructure.

Other: It primarily includes small business units that perform construction services for a variety of end markets in Mexico and elsewhere internationally.


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