Quanta Services (PWR) is well-positioned to benefit from increased infrastructure construction in electric T&D and energy pipelines in both the U.S. and Canada, and exposure to increased North American energy capex drives strong revenue growth and margin improvement for PWR, says Noelle Dilts, Vice President at Stifel, Nicolaus & Co.
“In the U.S., we estimate that it has about 45% market share in transmission, and then we estimate the company has about 30% share of the long haul oil and gas pipeline market…The midstream market has shown strength over the past two years, while the long haul market has struggled. Quanta has a strong position in long haul, which is the piece of the market we expect to improve significantly in 2013,” Dilts said.
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PWR is also in a good position in Canada in electric transmission and pipeline, and exposure to these verticals drives strong revenue growth and margin improvement, adding to other characteristics that make PWR a solid player in the construction space, Dilts says.
“The company also has a strong balance sheet. They have minimal debt and recently divested their telecommunication business, which has resulted in a strong net cash position of $1.85 per share. I think the company is in a good position to make an acquisition,” Dilts said.
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