This company has been acquired
Infrastructure and Energy Alternatives (IEA) Stock Overview
Infrastructure and Energy Alternatives, Inc., through its subsidiaries, operates as a diversified infrastructure construction company in the United States. More details
| Snowflake Score | |
|---|---|
| Valuation | 3/6 |
| Future Growth | 5/6 |
| Past Performance | 0/6 |
| Financial Health | 2/6 |
| Dividends | 0/6 |
Rewards
Risk Analysis
IEA Community Fair Values
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Infrastructure and Energy Alternatives, Inc. Competitors
Price History & Performance
| Historical stock prices | |
|---|---|
| Current Share Price | US$13.72 |
| 52 Week High | US$14.60 |
| 52 Week Low | US$6.38 |
| Beta | 1.73 |
| 1 Month Change | -3.79% |
| 3 Month Change | 54.33% |
| 1 Year Change | 31.29% |
| 3 Year Change | 408.15% |
| 5 Year Change | n/a |
| Change since IPO | 61.41% |
Recent News & Updates
MasTec Acquires IEA: Turnaround Possible, But Not Right Now
Both MasTec and IEA are diversified engineering, procurement, and construction companies. However, IEA significantly increases MasTec’s exposure to renewable energy projects. Thanks to IEA, MasTec will gain some issues with profitability, but as I have discussed before, I believe IEA is set for a turnaround. Will it be worth holding on to MTZ shares? Introduction to Renewed Thesis I am a shareholder of Infrastructure and Energy Alternatives (IEA), and have written an article discussing how current profit weakness is an opportunity for value expansion upon improvement. Well, it seems that I am not the only one looking for a turnaround play, as another EPC MasTec (MTZ) has acquired IEA. The current 30% premium, or 50% above my prior article, is certainly a strong return, and came far sooner than expected. However, the share price has been weak for at least a year and a half, as the current buyout price is only a mild premium over my first coverage of IEA. I am thankful that I have recently added more shares on the weakness, an important way to trade cyclical companies. The questions now are: to sell IEA prior to the completion of the acquisition, or to hold on to the coming MasTec shares. It is an interesting thought experiment, and I see a few pros and cons to both sides of the coin. Unfortunately, MasTec does not have a strong balance sheet, and this acquisition is both draining all cash on hand, and is dilutive ($14 total share price, $10.50 funded in cash and $3.50 in shares/dilution). At the same time, we remain in a weak cycle for EPCs, especially as the effects of the infrastructure bill remain unseen. If investor sentiment changes over the next few quarters thanks to out-performance, MasTec’s similarly low valuation allows for shares to gain at a rapid clip. MasTec Acquisition Presentation MasTec’s new pro forma outlook has been presented, shown in the image below, and I believe that the new company will gain necessary diversification. MTZ has traditionally relied on communications and power delivery revenues, while IEA has seen far more growth from renewable energy projects. Now, the company will have more growth segments to rely on even if governmental negligence prevents full stimulus (while one bill has been passed, effects have yet to be seen but renewable projects may be at the fore). I believe that stimulus will be necessary to allow for a bullish outlook on MasTec due to financial weakness. MasTec The acquisition exacerbates two major issues: debt and profitability. IEA is known as having profitability issues, even as revenue growth has averaged over 50% per year for multiple years. Meanwhile, MasTec has tried hard to maintain positive net income, but this has come with debt and at the expense of growth. It is difficult to expect that current profitability will be maintained, and so, investors may sell-off as the company attempts to consolidate the joint businesses. While this may lead to an opportunity later on, the shares may be weak in the intermediate term. As you can see in the two charts below, management will have a lot of work to do to find synergies and increase profit margins. Perhaps economies of scale, internal supplier/client relationships, and other catalysts will allow for improvement. Unfortunately, more stimulus/favorable contracts will be necessary. Koyfin Koyfin Moving to balance sheet issues, we can see that MasTec is already significantly levered. Now, IEA will be adding a further $400 million in debt to the combined company, a total over $2.5 billion. The deal will also be dilutive, so look for MasTec’s share count to increase. Lastly, IEA’s current losses are greater than MTZ’s current FCF, so it is unknown whether the balance sheet will be improved moving forward. This uncertainty further lowers investor sentiment, and in turn, share price. This is why the MTZ is already down 6% after the announcement, and selling may continue. Koyfin Koyfin One of the few positives I can see is the cheap acquisition price, and the continued opportunity for the value to rise. While reliant on both companies seeing increases in profitability, the opportunity arises thanks to fiscal stimulus. Further, IEA has access to the important clean energy industry that remains in a secular growth cycle. As MasTec’s valuation reaches all-time lows, one should expect this poor cycle to end, and a positive one to begin. While leverage will continue to hamper the EV/EBITDA value, the P/S indicates that any changes in profitability has the ability to quickly bring the value above 1.0x. This would account for over 60% return, and may occur within a few years based on current guidance. However, in the short-term, I would wait for the valuation to continue falling, and prices below 0.5x P/S are historically better times to buy MTZ.Long IEA, Short REI: Renewable Energy Vs. Fossil Fuels, A Showdown
The most important, and economically viable, pair trade in the market is: short fossil fuels - long renewables. Yes, yes, please hear me out. Before you click away, I will address dilemmas and hindrances to my thesis, including governmental inefficiency, wasteful spending, and risky investment strategies. For this reason, I provide multiple hedges on both sides of the aisle in order to perform proper risk management. I do not look to persuade you into choosing one or the other, I am merely sharing my own ideology on the matter.Recent updates
Shareholder Returns
| IEA | US Construction | US Market | |
|---|---|---|---|
| 7D | 1.3% | 4.1% | 1.7% |
| 1Y | 31.3% | 96.9% | 25.1% |
Return vs Industry: IEA exceeded the US Construction industry which returned 3.8% over the past year.
Return vs Market: IEA exceeded the US Market which returned -22.6% over the past year.
Price Volatility
| IEA volatility | |
|---|---|
| IEA Average Weekly Movement | 9.4% |
| Construction Industry Average Movement | 8.7% |
| Market Average Movement | 7.2% |
| 10% most volatile stocks in US Market | 16.7% |
| 10% least volatile stocks in US Market | 3.1% |
Stable Share Price: IEA's share price has been volatile over the past 3 months.
Volatility Over Time: IEA's weekly volatility (9%) has been stable over the past year.
About the Company
| Founded | Employees | CEO | Website |
|---|---|---|---|
| 1947 | 3,718 | JP Roehm | www.iea.net |
Infrastructure and Energy Alternatives, Inc., through its subsidiaries, operates as a diversified infrastructure construction company in the United States. The company engages in providing engineering, procurement, and construction (EPC) services for the renewable energy, traditional power, and civil infrastructure industries. It operates in two segments, Renewables and Specialty Civil.
Infrastructure and Energy Alternatives, Inc. Fundamentals Summary
| IEA fundamental statistics | |
|---|---|
| Market cap | US$667.00m |
| Earnings (TTM) | -US$78.35m |
| Revenue (TTM) | US$2.28b |
Is IEA overvalued?
See Fair Value and valuation analysisEarnings & Revenue
| IEA income statement (TTM) | |
|---|---|
| Revenue | US$2.28b |
| Cost of Revenue | US$2.08b |
| Gross Profit | US$201.48m |
| Other Expenses | US$279.83m |
| Earnings | -US$78.35m |
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
n/a
| Earnings per share (EPS) | -1.61 |
| Gross Margin | 8.83% |
| Net Profit Margin | -3.43% |
| Debt/Equity Ratio | 1,371.0% |
How did IEA perform over the long term?
See historical performance and comparisonCompany Analysis and Financial Data Status
| Data | Last Updated (UTC time) |
|---|---|
| Company Analysis | 2022/10/07 18:39 |
| End of Day Share Price | 2022/10/06 00:00 |
| Earnings | 2022/06/30 |
| Annual Earnings | 2021/12/31 |
Data Sources
The data used in our company analysis is from S&P Global Market Intelligence LLC. The following data is used in our analysis model to generate this report. Data is normalised which can introduce a delay from the source being available.
| Package | Data | Timeframe | Example US Source * |
|---|---|---|---|
| Company Financials | 10 years |
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| Analyst Consensus Estimates | +3 years |
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| Market Prices | 30 years |
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| Ownership | 10 years |
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| Management | 10 years |
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| Key Developments | 10 years |
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* Example for US securities, for non-US equivalent regulatory forms and sources are used.
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more.
Analysis Model and Snowflake
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Industry and Sector Metrics
Our industry and section metrics are calculated every 6 hours by Simply Wall St, details of our process are available on Github.
Analyst Sources
Infrastructure and Energy Alternatives, Inc. is covered by 5 analysts. 2 of those analysts submitted the estimates of revenue or earnings used as inputs to our report. Analysts submissions are updated throughout the day.
| Analyst | Institution |
|---|---|
| Brent Thielman | D.A. Davidson & Co. |
| Shahriar Pourreza | Guggenheim Securities, LLC |
| Paul Penney | Northland Capital Markets |