Saturday, 2 March 2024

Why MasTec Stock Is Gaining Ground Today

by Earn Media

Construction company MasTec (NYSE: MTZ) is feeling good about the new year after enduring a rough 2023. The upbeat talk has investors buying in, sending shares of MasTec up 12% as of 11 a.m. ET.

Demand appears to be slowly rebounding after a tough stretch

MasTec is a construction and engineering company focused on large infrastructure projects, energy, and communications construction. The company earned $0.66 per share in the fourth quarter on revenue of $3.3 billion, surpassing Wall Street expectations for $0.44 per share in earnings on $3.25 billion in sales.

The quarter ends what was a tough year on a high note. MasTec shares plunged back in November after the company said customer delays on big-ticket energy and infrastructure projects had caused it to miss top- and bottom-line estimates. Revenue was up 9% year over year in the quarter, and the company generated nearly $500 million in cash in the final three months of the year.

CEO Jose Mas said in a statement, “Demand is very strong for our services,” forecasting growth in 2024 and “double digit revenue and earnings growth in 2025 and beyond.”

MasTec is predicting a loss in the first quarter, which is usually the slowest period of the year, but it sees 2024 revenue coming in at $12.5 billion. In 2023, MasTec generated $12 billion in revenue.

Is MasTec a buy after its strong results?

Even with Friday’s gains, MasTec shares are still down 30% from their midsummer highs, a reflection of how poorly the second half of last year went for the company. This is shaping up to be a transition year, but investors tempted to buy in today might need to be patient, as the company is looking to 2025 to really see growth jump.

The bull case from here is that there is massive demand for large infrastructure projects and energy renewal. MasTec has a backlog of about $12 billion in future business on the books, and it also has opportunities to sign more deals as economic headwinds die down and customers look to get growth plans back on track.

For those willing to give this stock some time to work through the macro issues, investing in MasTec may be an attractive way to capitalize on the long-term need for big construction.

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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool recommends MasTec. The Motley Fool has a disclosure policy.