MasTec (MTZ)

Infrastructure construction company MasTec (NYSE:MTZ) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 22% year on year to $3.97 billion. The company’s full-year revenue guidance of $14.08 billion at the midpoint came in 0.6% above analysts’ estimates. Its non-GAAP profit of $2.48 per share was 7.7% above analysts’ consensus estimates.

Company Overview

Involved in the 1996 Olympic Games MasTec (NYSE:MTZ) is an infrastructure construction company that specializes in the telecommunications, energy, and utility industries.

Companies providing engineering and design services boast ever-evolving technical expertise. Compared to their counterparts who manufacture and sell physical products, these companies can also pivot faster to more trending areas due to their smaller physical asset bases. Green energy and water conservation, for example, are current themes driving incremental demand in this space. On the other hand, those providing engineering and design services are at the whim of construction and infrastructure project volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates.

Other companies in the infrastructure construction and services industry include Quanta Services (NYSE:PWR), Dycom Industries (NYSE:DY), and Primoris Services (NASDAQ:PRIM).

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, MasTec grew its sales at an incredible 16.6% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. MasTec’s annualized revenue growth of 8.3% over the last two years is below its five-year trend, but we still think the results were respectable.

We can dig further into the company’s revenue dynamics by analyzing its backlog, or the value of its outstanding orders that have not yet been executed or delivered. MasTec’s backlog reached $16.78 billion in the latest quarter and averaged 10.2% year-on-year growth over the last two years. Because this number is better than its revenue growth, we can see the company accumulated more orders than it could fulfill and deferred revenue to the future. This could imply elevated demand for MasTec’s products and services but raises concerns about capacity constraints.

This quarter, MasTec reported robust year-on-year revenue growth of 22%, and its $3.97 billion of revenue topped Wall Street estimates by 1.6%.

Looking ahead, sell-side analysts expect revenue to grow 8.8% over the next 12 months, similar to its two-year rate. This projection is above average for the sector and implies its newer products and services will help support its recent top-line performance.

Gross profit margin is a critical metric to track because it sheds light on its pricing power, complexity of products, and ability to procure raw materials, equipment, and labor.

MasTec has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 12.9% gross margin over the last five years. That means MasTec paid its suppliers a lot of money ($87.07 for every $100 in revenue) to run its business.

This quarter, MasTec’s gross profit margin was 13.6%, in line with the same quarter last year. On a wider time horizon, the company’s full-year margin has remained steady over the past four quarters, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

MasTec was profitable over the last five years but held back by its large cost base. Its average operating margin of 3% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

Analyzing the trend in its profitability, MasTec’s operating margin decreased by 2.4 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. MasTec’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q3, MasTec generated an operating margin profit margin of 5.3%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

MasTec’s EPS grew at an unimpressive 5.5% compounded annual growth rate over the last five years, lower than its 16.6% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

We can take a deeper look into MasTec’s earnings to better understand the drivers of its performance. As we mentioned earlier, MasTec’s operating margin was flat this quarter but declined by 2.4 percentage points over the last five years. Its share count also grew by 7.6%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For MasTec, its two-year annual EPS growth of 59.4% was higher than its five-year trend. This acceleration made it one of the faster-growing industrials companies in recent history.

In Q3, MasTec reported adjusted EPS of $2.48, up from $1.63 in the same quarter last year. This print beat analysts’ estimates by 7.7%. Over the next 12 months, Wall Street expects MasTec’s full-year EPS of $5.92 to grow 27%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

MasTec has shown weak cash profitability over the last five years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 4.5%, subpar for an industrials business.

Taking a step back, we can see that MasTec’s margin dropped by 3.7 percentage points during that time. This along with its unexciting margin put the company in a tough spot, and shareholders are likely hoping it can reverse course. If the trend continues, it could signal it’s becoming a more capital-intensive business.

MasTec’s free cash flow clocked in at $88.97 million in Q3, equivalent to a 2.2% margin. The company’s cash profitability regressed as it was 5 percentage points lower than in the same quarter last year, suggesting its historical struggles have dragged on.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

MasTec historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 8.3%, somewhat low compared to the best industrials companies that consistently pump out 20%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, MasTec’s ROIC averaged 1 percentage point increases each year. This is a good sign, and if its returns keep rising, there’s a chance it could evolve into an investable business.

MasTec reported $231.4 million of cash and $2.45 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $1.08 billion of EBITDA over the last 12 months, we view MasTec’s 2.1× net-debt-to-EBITDA ratio as safe. We also see its $81.04 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was encouraging to see MasTec beat analysts’ revenue expectations this quarter. We were also happy its backlog narrowly outperformed Wall Street’s estimates. On the other hand, its full-year EBITDA guidance slightly missed, which seems to be weighing on shares. The stock traded down 3.3% to $207 immediately following the results.

Updated: December 3, 2025 at 10:17 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own MasTec, you should also grasp the company’s longer-term business quality and valuation.

MasTec has a few positive attributes, but it doesn’t top our wishlist. First off, its revenue growth was exceptional over the last five years. And while MasTec’s low gross margins indicate some combination of competitive pressures and high production costs, its projected EPS for the next year implies the company’s fundamentals will improve.

MasTec’s P/E ratio based on the next 12 months is 28x. While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're pretty confident there are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $246.67 on the company (compared to the current share price of $218.54).