Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying strong candidates involves significant challenges and risks [1] Group 1: Company Overview - Quanta Services (PWR) is currently highlighted as a recommended growth stock, benefiting from a favorable Growth Score and a top Zacks Rank [2] - The company operates as a specialty contractor for utility and energy sectors, making it a strong growth pick [3] Group 2: Earnings Growth - Quanta Services has a historical EPS growth rate of 23.2%, with projected EPS growth of 15.2% for the current year, surpassing the industry average of 13.9% [4] Group 3: Cash Flow Growth - The year-over-year cash flow growth for Quanta Services stands at 24.6%, significantly higher than the industry average of 14.4% [5] - The company's annualized cash flow growth rate over the past 3-5 years is 21.9%, compared to the industry average of 6.2% [6] Group 4: Earnings Estimate Revisions - There have been upward revisions in current-year earnings estimates for Quanta Services, with the Zacks Consensus Estimate increasing by 0.1% over the past month [8] Group 5: Investment Positioning - Quanta Services has achieved a Growth Score of B and a Zacks Rank 2, indicating strong potential for outperformance in the growth stock category [9]

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Group 1 - Quanta Services (PWR) is currently outperforming the Construction sector, with a year-to-date performance increase of 19.6%, while the sector has seen an average decline of 0.6% [4] - The Zacks Rank for Quanta Services is 2 (Buy), indicating a positive outlook based on earnings estimates and revisions [3] - Over the past three months, the consensus estimate for Quanta Services' full-year earnings has increased by 1.4%, reflecting improving analyst sentiment [3] Group 2 - Quanta Services is part of the Engineering - R and D Services industry, which consists of 17 companies and is currently ranked 97 in the Zacks Industry Rank [5] - The average performance of stocks in the Engineering - R and D Services industry has been a gain of 8.2% this year, indicating that Quanta Services is performing better than its industry peers [5] - Southland Holdings (SLND), another outperforming stock in the Construction sector, has increased by 28.6% year-to-date and has a Zacks Rank of 2 (Buy) [4][5]

Company Performance - Quanta Services (PWR) experienced a price increase of +1.44% to $379.47, outperforming the S&P 500's gain of 0.8% on the same day [1] - Prior to the recent trading session, PWR shares had risen by 9.92%, surpassing the Construction sector's gain of 2.22% and the S&P 500's gain of 5.12% [1] Earnings Projections - The upcoming earnings report for Quanta Services is projected to show earnings per share (EPS) of $2.44, indicating a 28.42% increase from the same quarter last year [2] - Revenue is expected to reach $6.53 billion, reflecting a 16.73% increase compared to the year-ago quarter [2] Full Year Estimates - For the full year, earnings are projected at $10.32 per share and revenue at $27.03 billion, representing increases of +15.05% and +14.18% respectively from the previous year [3] - Changes in analyst estimates for Quanta Services are crucial as they often indicate shifts in short-term business dynamics, with positive revisions suggesting analyst optimism [3] Valuation Metrics - Quanta Services has a Forward P/E ratio of 36.24, which is significantly higher than the industry average of 20.14, indicating a premium valuation [6] - The company's PEG ratio stands at 2.68, compared to the industry average PEG ratio of 1.72, suggesting that the stock is priced higher relative to its projected earnings growth [6] Industry Context - The Engineering - R and D Services industry, which includes Quanta Services, holds a Zacks Industry Rank of 58, placing it in the top 24% of over 250 industries [7] - The strength of industry groups is measured by the Zacks Industry Rank, with top-rated industries outperforming lower-rated ones by a factor of 2 to 1 [7]

Core Insights - The article compares Fluor (FLR) and Quanta Services (PWR) to determine which stock presents a better value opportunity for investors in the Engineering - R and D Services sector [1] Valuation Metrics - Fluor has a forward P/E ratio of 19.78, while Quanta Services has a forward P/E of 34.95 [5] - Fluor's PEG ratio is 2.38, compared to Quanta Services' PEG ratio of 2.59, indicating Fluor may offer better value considering expected earnings growth [5] - Fluor's P/B ratio is 2.29, significantly lower than Quanta Services' P/B ratio of 7.16, suggesting Fluor is more undervalued relative to its book value [6] Earnings Outlook - Fluor currently holds a Zacks Rank of 2 (Buy), indicating an improving earnings outlook, while Quanta Services has a Zacks Rank of 3 (Hold) [3][7] - The improving earnings outlook for Fluor enhances its attractiveness as a value investment [7] Value Grades - Based on various valuation metrics, Fluor holds a Value grade of B, whereas Quanta Services has a Value grade of D, further supporting Fluor as the superior value option [6]

Industry Overview - The United States-based engineering and construction firms are experiencing a boom in public infrastructure demand driven by government initiatives such as the Infrastructure Investment and Jobs Act (IIJA), CHIPS Act, and Inflation Reduction Act (IRA) [1][3] - Public infrastructure spending is at its peak, primarily due to the aim of enhancing supply-chain resilience and boosting domestic manufacturing [3] Company Profiles - EMCOR Group, Inc. (EME) is a leading provider of mechanical and electrical construction, industrial and energy infrastructure, and building services [2] - Quanta Services, Inc. (PWR) specializes in utility and energy infrastructure and is one of North America's top contractors in electric power transmission and distribution [2] EMCOR Group, Inc. (EME) - EMCOR is benefiting from growing infrastructural demand, particularly in data centers, driven by the surge in Artificial Intelligence applications and digital transformation initiatives [5] - The acquisition of Miller Electric on February 3, 2025, enhances EMCOR's electrical construction capabilities and aligns with its growth strategy [6] - As of March 31, 2025, EMCOR's remaining performance obligations (RPOs) reached a record value of $11.75 billion, reflecting a 28% year-over-year growth [7] - EMCOR expects full-year revenues between $16.1 billion and $16.9 billion, indicating year-over-year growth of 10.5-16% [8] Quanta Services, Inc. (PWR) - Quanta's strength lies in delivering complex, large-scale projects such as power grid modernization and renewable energy infrastructure [9] - As of March 31, 2025, Quanta had a total backlog of $35.25 billion, with a 12-month backlog of $19.42 billion, showing significant growth from the previous year [12] - Quanta expects revenues between $26.7 billion and $27.2 billion for 2025, reflecting a 13.8% increase at the midpoint from 2024 [13] Financial Performance and Valuation - EMCOR has a trailing 12-month return on equity (ROE) of 37.1%, significantly higher than Quanta's average of 19.7%, indicating stronger shareholder value generation [10][20] - EMCOR trades at a lower forward price-to-earnings (P/E) ratio compared to Quanta, suggesting a more attractive entry point for investors [10][16] - The Zacks Consensus Estimate for EMCOR's 2025 EPS indicates a 9.6% year-over-year growth, while Quanta's 2025 EPS estimates imply a 15.1% improvement [18][20] Investment Outlook - EMCOR is positioned for steady growth with a discounted valuation, making it an attractive option for investors seeking sustainable returns [22][24] - Quanta, while benefiting from diversified market exposure and energy transition trends, faces challenges due to its premium valuation [23][24]

Core Viewpoint - Quanta Services (PWR) has been upgraded to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the importance of changing earnings estimates in determining stock price movements, as institutional investors often base their valuations on these estimates [4][6]. - An increase in earnings estimates typically leads to higher fair value for a stock, prompting institutional investors to buy or sell, which in turn affects stock prices [4]. Quanta Services' Earnings Outlook - The upgrade for Quanta Services indicates a positive outlook for its earnings, suggesting that the company's underlying business is improving, which should lead to a rise in its stock price [5][10]. - For the fiscal year ending December 2025, Quanta Services is expected to earn $10.33 per share, reflecting a 15.2% increase from the previous year, with a 1.5% rise in the Zacks Consensus Estimate over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks based on earnings estimate revisions, with only the top 20% of stocks receiving a 'Strong Buy' or 'Buy' rating, indicating superior earnings estimate revision features [9][10]. - The Zacks Rank 2 for Quanta Services places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price. Do they really matter, though?Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about Quanta Services (PWR) .Quanta Services currently has an average b ...

Financial Data and Key Metrics Changes - The company has compounded earnings at a high teens CAGR over the last decade, despite zero load growth, indicating strong operational efficiency and market positioning [81]. - The company expects organic growth to be in the high upper single digits, reflecting confidence in future demand and operational capabilities [82]. Business Line Data and Key Metrics Changes - The company operates in three addressable markets: utility infrastructure, renewable infrastructure, and technology infrastructure, with significant growth potential in each [3][4]. - The company self-performs 85% of its work, which is critical for managing costs and ensuring quality [12][14]. Market Data and Key Metrics Changes - The utility capital market is estimated to be around $250 to $300 billion, while technology capital is around $200 to $300 billion, indicating a large and growing addressable market [10][11]. - The company sees a significant demand for transmission infrastructure, which is essential for supporting load growth driven by data centers and renewable energy [24][26]. Company Strategy and Development Direction - The company is evolving from an electrical contractor to a full electrical infrastructure solutions provider, focusing on integrating various services to meet client needs [5][6]. - Recent acquisitions, such as Cupertino, have expanded the company's capabilities into low voltage and behind-the-meter opportunities, enhancing its market position [34][36]. Management's Comments on Operating Environment and Future Outlook - Management believes that the grid needs to double in generation capacity over the next 20 years to meet growing demand, particularly from data centers and onshoring [24][26]. - The company is optimistic about the future, citing strong demand for renewable energy and infrastructure projects, despite potential regulatory changes [50][52]. Other Important Information - The company is focused on training and developing skilled labor to meet future demands, emphasizing the importance of craft in its operations [19][20]. - The company has a robust pipeline of projects and is well-positioned to capitalize on the growing demand for renewable energy and infrastructure solutions [49][50]. Q&A Session Summary Question: What is the breakdown between maintenance CapEx and growth CapEx? - The company indicated that approximately 35% of utility CapEx is for O&M, while 65% is for new builds, reflecting a strong focus on growth [86][88]. Question: How does the company manage cost risk in fixed-price contracts? - Management stated that most work is negotiated, and they have a long track record of executing fixed-price contracts effectively, with an average contract size around $6 million [90][92]. Question: What are the expectations for renewable backlog growth? - The company expects the renewable backlog to grow sequentially, indicating confidence in future project demand and execution capabilities [101].

Core Viewpoint - Growth investors are increasingly focused on stocks with above-average financial growth, which can lead to solid returns, but identifying such stocks is challenging due to inherent volatility and risks [1] Group 1: Growth Stock Identification - The Zacks Growth Style Score system aids in identifying promising growth stocks by analyzing real growth prospects beyond traditional metrics [2] - Quanta Services (PWR) is highlighted as a recommended stock with a favorable Growth Score and a top Zacks Rank [2] Group 2: Earnings Growth - Earnings growth is a critical factor for growth investors, with double-digit growth being particularly attractive as it signals strong future prospects [3] - Quanta Services has a historical EPS growth rate of 23.2%, with projected EPS growth of 15.1% this year, surpassing the industry average of 10.9% [4] Group 3: Cash Flow Growth - High cash flow growth is essential for growth-oriented companies, allowing them to fund new projects without relying on external financing [5] - Quanta Services currently exhibits a year-over-year cash flow growth of 24.6%, exceeding the industry average of 17.2% [5] - The company's annualized cash flow growth rate over the past 3-5 years stands at 21.9%, compared to the industry average of 6.2% [6] Group 4: Earnings Estimate Revisions - Trends in earnings estimate revisions are crucial, with positive revisions correlating strongly with stock price movements [7] - Quanta Services has seen upward revisions in current-year earnings estimates, with a 1.3% increase in the Zacks Consensus Estimate over the past month [7] Group 5: Overall Assessment - Quanta Services holds a Zacks Rank of 2 and a Growth Score of B, indicating its potential as an outperformer and a solid choice for growth investors [9]