The past six months have been a windfall for Quanta’s shareholders. The company’s stock price has jumped 47.7%, setting a new 52-week high of $608.95 per share. This was partly thanks to its solid quarterly results, and the run-up might have investors contemplating their next move.
Is now still a good time to buy PWR? Or is this a case of a company fueled by heightened investor enthusiasm? Find out in our full research report, it’s free.
Why Are We Positive On Quanta?
A construction engineering services company, Quanta (NYSE: PWR) provides infrastructure solutions to a variety of sectors, including energy and communications.
1. Surging Backlog Locks In Future Sales
Investors interested in Energy Products and Services companies should track backlog in addition to reported revenue. This metric shows the value of outstanding orders that have not yet been executed or delivered, giving visibility into Quanta’s future revenue streams.
Quanta’s backlog punched in at $43.98 billion in the latest quarter, and over the last two years, its year-on-year growth averaged 18%. This performance was fantastic and shows the company has a robust sales pipeline because it is accumulating more orders than it can fulfill. Its growth also suggests that customers are committing to Quanta for the long term, enhancing the business’s predictability. 
2. Projected Revenue Growth Is Remarkable
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite, though some deceleration is natural as businesses become larger.
Over the next 12 months, sell-side analysts expect Quanta’s revenue to rise by 17.7%, close to its 20.5% annualized growth for the past five years. This projection is eye-popping for a company of its scale and suggests the market is baking in success for its products and services.
3. Outstanding Long-Term EPS Growth
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Quanta’s EPS grew at 22.9% compounded annual growth rate over the last five years, higher than its 20.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Final Judgment
These are just a few reasons why we think Quanta is a great business, and with the recent surge, the stock trades at 46.3× forward P/E (or $608.95 per share). Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
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