Quanta (PWR) Wins Contract for North Montney Mainline Project

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Quanta Services, Inc. PWR has secured a contract from NOVA Gas Transmission Ltd., a wholly-owned subsidiary of TransCanada (TRP), for spread three of the North Montney Mainline Project in Canada.

Per the contract, Quanta will utilize one mainline spread, and construct and install approximately 39 miles of new 42-inch diameter natural gas mainline pipe in Fort St. John, British Columbia.

Quanta Services will initiate the construction on the project in the third quarter of 2018 and expects to complete substantial part of the development in the first half of 2019. This project will be reflected in Quanta's third-quarter 2018 backlog.

Quanta Services has been generating higher revenues, given its three-pronged growth strategy that comprises focusing on timely delivery of projects to exceed customer expectation, leverage on core business to expand in complementary adjacent service lines and continuously exploring new service lines.

The company's total revenues increased 20.7% year over year in the last reported quarter, aided by robust revenue growth across the board. Notably, Oil and Gas Infrastructure segment revenues were up 20.7% to $1,086.2 million, largely driven by a contribution of around $195 million from the Stronghold acquisition.

The company's Electric Power operations continued to execute well from both top line and margin perspective. On the other hand, Quanta Services' Oil and Gas segment outlook looks equally promising, primarily due to the improving mainline and natural gas distribution, as well as integrity markets. The company also remains optimistic about the second half of 2018 as base business activity seasonally increases and larger pipeline projects speed up the pace.

The company reported record 12-month backlog of $7.4 billion at the end of second quarter. Meanwhile, the latest project will be reflected in Quanta's third-quarter 2018 backlog.

Shares of Quanta Services have lost 12.7% year to date compared with its industry 's decline of 7.6%. That said, healthy levels of base load work, including midstream infrastructure support, downstream support services and natural gas distribution are expected to boost its share price going forward. This Zacks Rank #4 (Sell) company expects strong performance from pipeline projects going forward, driven by a considerable increase in large pipeline revenue contributions amid an active bidding and negotiating environment.

Stocks to Consider

Some better-ranked stocks in the broader sector include Gates Industrial Corporation plc GTES , KBR, Inc. KBR and Jacobs Engineering Group Inc. JEC . While Gates Industrial and KBR sport a Zacks Rank #1 (Strong Buy), Jacobs carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Gates Industrial is expected to record an EPS growth rate of 42.2% in 2018.

KBR recorded an average positive surprise of 12.26% in the trailing four quarters, beating estimates in three of the past four quarters.

Jacobs also delivered an average positive surprise of 12.34% in the trailing four quarters, beating estimates all through.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: JEC , PWR , KBR , GTES

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