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Construction and Engineering Stocks Q1 Results: Benchmarking Quanta (NYSE:PWR)


Adam Hejl /
2024/06/28 4:58 am EDT

As the Q1 earnings season comes to a close, it’s time to take stock of this quarter's best and worst performers in the construction and engineering industry, including Quanta (NYSE:PWR) and its peers.

Construction and engineering companies not only boast technical know-how in specialized areas but also may hold special licenses and permits. Those who work in more regulated areas can enjoy more predictable revenue streams - for example, sprinkler systems need to be maintained every three years. More recently, services addressing energy efficiency and labor availability are also creating incremental demand. But like the broader industrials sector, construction and engineering companies are at the whim of economic cycles as external factors like interest rates can greatly impact the new construction that drives topline performance for these companies.

The 14 construction and engineering stocks we track reported a decent Q1; on average, revenues beat analyst consensus estimates by 2.8%. while next quarter's revenue guidance was 1.9% below consensus. Inflation progressed towards the Fed's 2% goal at the end of 2023, leading to strong stock market performance. The start of 2024 has been a bumpier ride, as the market switches between optimism and pessimism around rate cuts due to mixed inflation data, but construction and engineering stocks have shown resilience, with share prices up 8.1% on average since the previous earnings results.

Quanta (NYSE:PWR)

A construction engineering services company, Quanta (NYSE:PWR) provides infrastructure solutions to a variety of sectors, including energy and communications.

Quanta reported revenues of $5.03 billion, up 13.6% year on year, topping analysts' expectations by 1.8%. It was a weak quarter for the company, with a miss of analysts' operating margin and earnings estimates.

"Quanta's first quarter results, which include double-digit growth in revenue, adjusted EBITDA and adjusted earnings per share and record cash flow, demonstrate an overall good start to the year. In particular, our Electric Power Infrastructure Solutions segment performed well with better-than-expected profitability, reflecting continued solid performance and safe execution. Total backlog at the end of the first quarter was $29.9 billion, which we believe reflects strong demand for our solutions that support our customers' energy-transition initiatives and that increase reliability, safety, security, efficiency and connectivity of infrastructure assets through modernization," said Duke Austin, President and Chief Executive Officer of Quanta Services.

Quanta Total Revenue

The stock is up 4.4% since the results and currently trades at $267.06.

Is now the time to buy Quanta? Access our full analysis of the earnings results here, it's free.

Best Q1: Comfort Systems (NYSE:FIX)

Having historically grown through organic means as well as acquisitions of numerous peers and competitors, Comfort Systems USA (NYSE:FIX) provides mechanical and electrical contracting services.

Comfort Systems reported revenues of $1.54 billion, up 30.8% year on year, outperforming analysts' expectations by 4.8%. It was an incredible quarter for the company, with an impressive beat of analysts' backlog sales estimates.

Comfort Systems Total Revenue

Comfort Systems scored the fastest revenue growth among its peers. The stock is up 1.4% since the results and currently trades at $316.

Is now the time to buy Comfort Systems? Access our full analysis of the earnings results here, it's free.

Weakest Q1: MDU Resources (NYSE:MDU)

Founded to provide electricity to towns in Minnesota, MDU Resources (NYSE:MDU) provides products and services in the utilities and construction materials industries.

MDU Resources reported revenues of $1.21 billion, down 15.1% year on year, falling short of analysts' expectations by 8.4%. It was a weak quarter for the company, with a miss of analysts' operating margin estimates and earnings estimates.

MDU Resources had the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is up 0.6% since the results and currently trades at $25.02.

Read our full analysis of MDU Resources's results here.

Sterling (NASDAQ:STRL)

Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure (NASDAQ:STRL) provides civil infrastructure construction.

Sterling reported revenues of $440.4 million, up 9.1% year on year, surpassing analysts' expectations by 4.4%. It was a stunning quarter for the company, with an impressive beat of analysts' earnings estimates and a solid beat of analysts' operating margin estimates.

The stock is up 12.7% since the results and currently trades at $118.77.

Read our full, actionable report on Sterling here, it's free.

EMCOR (NYSE:EME)

Through its network of over 70 subsidiaries, EMCOR (NYSE:EME) provides electrical, mechanical, and building construction and services

EMCOR reported revenues of $3.43 billion, up 18.7% year on year, surpassing analysts' expectations by 6.4%. It was a stunning quarter for the company, with an impressive beat of analysts' revenue and earnings estimates.

EMCOR achieved the highest full-year guidance raise among its peers. The stock is up 9.4% since the results and currently trades at $370.38.

Read our full, actionable report on EMCOR here, it's free.

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