What a fantastic six months it’s been for Quanta. Shares of the company have skyrocketed 65.8%, hitting $435.50. This was partly thanks to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
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 for active Edge members.
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
We can better understand Energy Products and Services companies by analyzing their backlog. 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 $35.84 billion in the latest quarter, and over the last two years, its year-on-year growth averaged 20.3%. 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 12.7%. While this projection is below its 19.1% annualized growth rate for the past two years, it is particularly noteworthy for a company of its scale and indicates the market is baking in success for its products and services.
3. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Quanta’s EPS grew at an astounding 24.8% compounded annual growth rate over the last five years, higher than its 17.3% 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 Quanta is a rock-solid business worth owning, and with the recent surge, the stock trades at 37× forward P/E (or $435.50 per share). Is now a good time to buy? See for yourself in our full research report, it’s free for active Edge members.
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