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Quanta Services, Inc. PWR has been benefiting from continued demand for infrastructure services, particularly in the electric power, renewable energy and utility sectors. Ongoing investments in grid modernization, energy transition projects and broadband expansion have been playing a crucial role in driving revenues.
Estimates for the company’s 2025 earnings per share (EPS) have moved north in the past 30 days to $10.18 per share from $10.17 per share. The estimated figure suggests a growth rate of 13.5% year over year.
The growth prospect is further solidified with a VGM Score of A, led by a Growth Score of A and a Momentum Score of B. The positive trend signifies bullish analysts’ sentiments, robust fundamentals and prospects for an outperformance in the near term.
Despite the positive momentum, Quanta faced certain challenges that impacted its operations. Regulatory uncertainties in certain regions added complexity to project execution, requiring Quanta to navigate policy changes and permitting processes.
Quanta stock has dropped 19.4% so far this year, underperforming the Zacks Engineering - R and D Services industry’s 16.1% decline. Will President Donald Trump's recent executive orders — "Unleashing American Energy" and "National Energy Emergency" — provide hindrances for Quanta?
High Infrastructural Demand: President Donald Trump's recent executive orders, "Unleashing American Energy" and "National Energy Emergency," aim to deregulate the energy sector and promote fossil fuel production. These actions could have several implications for Quanta, a company specializing in infrastructure solutions for the electric power and energy industries. On the positive front, the executive orders direct federal agencies to expedite the leasing, permitting and development of energy projects, particularly those involving fossil fuels and nuclear power. This emphasis on accelerating energy infrastructure development could lead to a surge in projects requiring Quanta's expertise in the construction and maintenance of pipelines, transmission lines and related facilities.
By reducing environmental reporting and carbon monitoring requirements, these orders aim to make the regulatory environment more favorable for energy companies. This could lower compliance costs and facilitate a more predictable process for Quanta when undertaking new projects, potentially enhancing operational efficiency.
Strategic Growth Approach: Quanta is executing a three-pronged growth strategy aimed at consistently exceeding customer expectations through timely project delivery, expanding its core business into complementary adjacent service lines and continuously exploring new opportunities. With strong engineering and project management expertise, Quanta is well-positioned to capitalize on the industry's shift toward the engineering, procurement and construction (EPC) model. Additionally, the company is strategically aligned with major industry trends, including the energy transition and advancing technologies such as electric vehicle charging infrastructure and underground electrical systems. As a result, Quanta remains confident in achieving a 10% organic adjusted EPS compound annual growth rate (CAGR) and exceeding 15% adjusted EPS CAGR through 2026.
Solid Backlog Level: The company reported a 12-month backlog of $19.77 billion and a total backlog of $34.54 billion at the end of 2024. This compares with the December 2023-end 12-month backlog of $17.23 billion and the total backlog of $30.11 billion. Quanta’s optimism stems from healthy backlog levels, which are expected to grow further. This demonstrates the strength of its core operations.
Labor & Supply-Chain Woes: The growing demand for craft-skilled labor, particularly in renewable energy, data centers and infrastructure, has outpaced supply, driving up labor costs. These costs are passed to customers or built into long-term contracts to protect margins. However, labor shortages and material constraints have caused project delays, impacting revenue conversion. The company also noted that supply-chain challenges continue to affect renewable energy and transmission projects.
Challenges From Trump's Executive Orders: The administration's focus on fossil fuels includes pausing offshore wind approvals and halting incentives for green energy. Given that renewables were expected to contribute significantly to new capacity in the coming years, this policy shift could reduce opportunities for Quanta in the renewable energy sector.
While deregulation may spur short-term growth in traditional energy projects, the global trend toward renewable energy and increasing emphasis on sustainability could lead to long-term market uncertainties. Companies heavily invested in fossil fuel infrastructure might face challenges as the energy landscape evolves.
Quanta currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Construction sector are M-tron Industries, Inc. MPTI, AECOM ACM and Sterling Infrastructure, Inc. STRL.
M-tron currently sports a Zacks Rank #1 (Strong Buy). The company met the consensus mark in the recently released fourth-quarter results. The stock has declined 14.2% year to date (YTD). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for M-tron’s 2025 sales and EPS indicates growth of 9.4% and 0.7%, respectively, from the year-ago levels.
AECOM currently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 6.5%, on average. The stock has dropped 11.5% YTD.
The Zacks Consensus Estimate for AECOM’s fiscal 2025 sales and EPS indicates growth of 5.6% and 12.8%, respectively, from the year-ago levels.
Sterling currently carries a Zacks Rank #2. The company delivered a trailing four-quarter earnings surprise of 16.2%, on average. The stock has declined 30.5% YTD.
The Zacks Consensus Estimate for Sterling’s 2025 sales indicates a decrease of 4.1% but implies 34.6% growth for EPS from the year-ago levels.
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This article originally published on Zacks Investment Research (zacks.com).
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