Is MasTec Well Positioned After 53% Surge and New Infrastructure Spending Bill?

If you are sizing up MasTec stock right now, you are definitely not alone. With the market buzzing about infrastructure and energy resilience, MasTec's trajectory is hard to ignore. Over just the past five years, MasTec shares have soared by 306.1%, and even the last twelve months show a powerful 53.5% gain. Sure, the past week has seen a dip of 9.4%, perhaps reflecting shifting sentiment or the broader market’s mood, but that hardly overshadows the longer-term surge.

These sprawling returns invite a pressing question: Is all this momentum justified, or is the market getting ahead of itself? In the last month shares nudged up 2.9%, and year-to-date returns have exploded by 39.7%. Some of this price action likely ties back to optimism on expansion in renewables and the nationwide focus on upgrading infrastructure. Investors seem to be baking in a growth story, but what about value?

Looking at MasTec through a value lens, the numbers are a bit more restrained. Based on six standard valuation metrics, MasTec is currently undervalued in just one of them, earning a score of 1 out of 6. That can raise eyebrows for value-focused buyers and spark debate on whether MasTec is stretching or simply growing into a bigger story.

So how do we actually decide if MasTec is a bargain at these levels? Next, let's break down the most common valuation checks investors use. Stay tuned, because there might be an even smarter way to size up the stock’s potential.

MasTec scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: MasTec Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's true worth by forecasting future cash flows and discounting them back to the present. This approach gives investors a sense of what MasTec is fundamentally worth today based on expected performance, rather than just recent stock price trends.

For MasTec, the current Free Cash Flow stands at $643.79 Million. Analyst projections suggest steady growth, climbing to a projected $990.67 Million by 2029. While analysts provide detailed estimates for the next five years, future projections beyond that period are extrapolated using financial modeling. These growth trends highlight an expectation that MasTec will continue generating stronger cash flows in years to come.

Crunching these numbers, the DCF model arrives at an intrinsic share value of $225.91, which is about 13.4% higher than where the stock is trading right now. This means MasTec appears to be undervalued according to this rigorous cash flow-based approach.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for MasTec.

Our Discounted Cash Flow (DCF) analysis suggests MasTec is undervalued by 13.4%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: MasTec Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used valuation metric, especially for profitable companies like MasTec. The PE ratio helps investors gauge how much they are paying relative to the company's earnings, making it a practical measure for comparing valuations across similar businesses. Generally, companies with higher growth prospects or lower risk profiles command higher PE ratios, while riskier or slower-growing companies trade at lower multiples.

Currently, MasTec carries a PE ratio of 57.1x. For context, this is notably above both the construction industry average of 35.6x and the average for its closest peers, which stands at 47.1x. At first glance, this might suggest that the stock is trading at a premium, possibly fueled by optimism around its long-term prospects and recent earnings performance.

However, a more tailored perspective comes from Simply Wall St's proprietary "Fair Ratio." Unlike a simple comparison with peers or industry averages, the Fair Ratio is tailored for MasTec and factors in its unique mix of earnings growth, industry placement, profitability, market cap, and risk profile. For MasTec, the Fair PE Ratio is set at 41.1x. Since this is significantly below the current PE ratio, it suggests the market may be assigning too much value to the stock right now when all factors are considered.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your MasTec Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is your opportunity to describe the story behind the numbers. It is how you combine your view of MasTec’s business prospects with specific assumptions about its future revenues, margins, and risks, ultimately arriving at a fair value that makes sense to you.

Narratives link the company's real-world story to financial forecasts and then to a clear estimate of fair value, turning raw data into actionable insight. They are designed to be easy and approachable. On Simply Wall St’s platform, millions of investors use the Community page to create, share, and learn from Narratives every day.

By framing your investment thesis as a Narrative, you can quickly see how your view compares to others and track how your fair value stacks up against the current share price. This makes it much easier to know whether it is time to buy, sell, or hold.

Better yet, Narratives update dynamically as fresh news, analyst estimates, or earnings results come in, so your viewpoint stays relevant in real time. For example, you might see one investor’s Narrative projecting a fair value of $227.0 for MasTec (focused on policy tailwinds and margin expansion), while another more cautious Narrative sees fair value as low as $140.0 (highlighting execution and regulatory risks).

Do you think there's more to the story for MasTec? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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