MasTec Is A Late Bloomer That's Finally Coming Into Its Own

Core Insights - The article discusses the journey of Rich Karlgaard, a late bloomer who eventually found success, and draws parallels to MasTec (MTZ), suggesting that late-blooming companies can also thrive despite past struggles [3][15]. Company Overview - MasTec is positioned within a growing industry that is essential for building the infrastructure of the digital world, including sectors like AI, climate change, digital healthcare, and electric vehicles [3][15]. - The company has a long history, with predecessor companies dating back to 1929, and it went public in 1998 [6]. Financial Performance - MasTec's revenue growth over the past three years has been 19.88%, significantly higher than the industry median of 11.14% [8]. - However, the company's EBITDA growth has been negative at -2.38% over three years, contrasting with the industry median of 11.73% [8]. - The company has faced challenges in translating sales growth into profitability, with core fundamentals showing weakness [8][9]. Recent Developments - MasTec has been actively acquiring companies, spending $1.2 billion in 2021 and $635.8 million in 2022, which has increased its long-term debt significantly [14]. - The company has encountered difficulties with its recent acquisition of Infrastructure and Energy Alternatives (IEA), leading to revenue challenges in its Clean Energy and Infrastructure segment [14][15]. Future Outlook - Despite recent setbacks, MasTec's management expresses confidence in future growth, particularly in the Clean Energy and Infrastructure segment, with expectations of significant revenue growth in the second half of 2023 [15][22]. - The company anticipates organic revenue growth of nearly 20% in 2024 compared to the previous year [23]. Industry Trends - The Communications segment is evolving from wireline to wireless, driven by the demand for 5G and Internet of Things (IoT) technologies [24]. - The Power Delivery segment is critical for addressing aging infrastructure and climate change, with increasing investments in grid hardening and maintenance [25][27]. - The Oil and Gas segment remains vital, focusing on gas pipeline transportation, which is essential for meeting current energy demands [29]. Valuation Metrics - MasTec's forward P/E ratio is 34.49, significantly higher than the industry median of 17.94, indicating that the market expects strong future growth [34]. - The projected 3-5 year EPS growth rate for MasTec is 20%, compared to the industry average of 14.59% [34]. Investment Sentiment - The article concludes with a "Buy" rating for MasTec, suggesting that despite its high valuation, the company's growth prospects justify the premium [40].