MTZ - MasTec: Corrected Heavily But Still Expensive
2024-01-24 05:48:37 ET
Summary
- The persistent weakness in certain segments of MasTec's business is anticipated to largely offset the advantages derived from a robust backlog and synergy benefits.
- Although the near-term outlook appears weak, the long-term prospects are expected to benefit from secular tailwinds, including federal funding.
- Given the current overvaluation of MTZ stock and the presence of near-term headwinds, my stance is to remain on the sidelines at this time.
The Thesis
MasTec (MTZ) is poised to leverage its strong backlog and diversified business segments, anticipating gains from the IEA acquisition in the upcoming quarters. This is expected to counterbalance short-term weaknesses in areas like the Communication and Power Delivery segments. Despite recent corrections, the stock may face continued pressure due to anticipated margin contraction in the near to mid-term, attributed to slower revenue growth and reduced operational leverage. The market is also anticipating a significant 42.6% decline in the company's EPS to $1.75 for FY23 compared to the previous year....
MasTec: Corrected Heavily But Still Expensive