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Quanta Services Trims Q3 Outlook, Shares Hit 52-Week Low

Quanta Services, Inc.PWR released its preliminary expectation for the third quarter 2015 earnings. The company has lowered its expectation for the to-be-reported quarter owing to persisting operational problems.

Owing to this, shares of the company tumbled over 28% during the regular trading session on NYSE on Oct 16. In between, it also touched the 52-week low of $18.5.

Why the Pessimistic Guidance?

For the third quarter of 2015, Quanta Services anticipates its earnings per share from continuing operations to be in the range of 22-24 cents - lower than the earlier guided band of 34-40 cents. Also, revenues for the quarter are projected to be below the midpoint of its formerly expected range of $1.9 billion - $2.0 billion.

This pessimism is due to the rising competition in small and medium scale electric transmission as well as delays in the company's projects. Particularly, Quanta Services expects operating margin for the Oil and Gas Infrastructure Services segment to be negatively impacted by higher-than-expected expenses on two related projects along with postponement of a mainline pipe project, which will now move to construction after 2016. However, the negative impact of such issues on revenues will be offset by a rise in revenues from other services of the company.

Due to the above-mentioned factors, for fourth-quarter 2015, Quanta Services suspects its revenues to be $200 million lower than the previously anticipated figure.

Conclusion

Quanta Services has been coming up with meek earnings results over the last few quarters mainly due to weak Electric Power Infrastructure segment performance. On account of dismal quarterly results in the first half of the year, Quanta Services has curtailed its outlook for 2015 adjusted earnings and revenues. Moreover, delays in projects have been among the company's main concerns. In the second quarter too, Quanta Services' multiple projects in the Northeast region of the U.S. were hit adversely by regulatory delays, leading to deferring of $80 million in revenues from the end of this year to 2016.

Quanta Services is expected to report its full third quarter 2015 earnings results on Nov 5, 2015. Investors interested in engineering/research & development services industry may consider stocks like KBR, Inc. KBR , Fluor Corporation FLR and AECOM ACM , which are expected to schedule their quarterly results by the coming month.

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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.


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

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