Stock Analysis
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- NYSE:MTZ
The three-year decline in earnings for MasTec NYSE:MTZ) isn't encouraging, but shareholders are still up 233% over that period
MasTec, Inc. (NYSE:MTZ) shareholders might be concerned after seeing the share price drop 11% in the last month. In contrast, the return over three years has been impressive. Indeed, the share price is up a very strong 233% in that time. It's not uncommon to see a share price retrace a bit, after a big gain. Only time will tell if there is still too much optimism currently reflected in the share price.
Although MasTec has shed US$535m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.
Check out our latest analysis for MasTec
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Over the last three years, MasTec failed to grow earnings per share, which fell 56% (annualized).
Thus, it seems unlikely that the market is focussed on EPS growth at the moment. Given this situation, it makes sense to look at other metrics too.
It may well be that MasTec revenue growth rate of 12% over three years has convinced shareholders to believe in a brighter future. In that case, the company may be sacrificing current earnings per share to drive growth, and maybe shareholder's faith in better days ahead will be rewarded.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
MasTec is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. If you are thinking of buying or selling MasTec stock, you should check out this free report showing analyst consensus estimates for future profits.
A Different Perspective
It's good to see that MasTec has rewarded shareholders with a total shareholder return of 0.6% in the last twelve months. However, that falls short of the 15% TSR per annum it has made for shareholders, each year, over five years. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 3 warning signs for MasTec (1 is concerning!) that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
What are the risks and opportunities for MasTec?
MasTec, Inc., an infrastructure construction company, provides engineering, building, installation, maintenance, and upgrade services for communications, energy, utility, and other infrastructure primarily in the United States and Canada.
Rewards
Earnings are forecast to grow 58.59% per year
Risks
Interest payments are not well covered by earnings
Shareholders have been diluted in the past year
Profit margins (0.3%) are lower than last year (4.1%)
Large one-off items impacting financial results
Further research on
MasTec
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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.
About NYSE:MTZ
MasTec
MasTec, Inc., an infrastructure construction company, provides engineering, building, installation, maintenance, and upgrade services for communications, energy, utility, and other infrastructure primarily in the United States and Canada.
Reasonable growth potential and fair value.
