MasTec’s (NYSE:MTZ) Q4 Sales Beat Estimates, Full-Year Outlook Slightly Exceeds Expectations

Infrastructure construction company MasTec (NYSE:MTZ) reported revenue ahead of Wall Street’s expectations in Q4 CY2024, with sales up 3.8% year on year to $3.40 billion. Revenue guidance for the full year exceeded analysts’ estimates, but next quarter’s guidance of $2.7 billion was less impressive, coming in 5.6% below expectations. Its non-GAAP profit of $1.44 per share was 18% above analysts’ consensus estimates.

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Jose Mas, MasTec's Chief Executive Officer, commented, "Third and fourth quarter financial performance showed substantial improvement in 2024 giving us great momentum into 2025. By focusing on execution, we saw nice margin expansion, exceeding our expectations, and we saw almost $2 billion in backlog growth for the company during the year, a leading indicator of the strong growth opportunities ahead of us."

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.

Engineering and Design Services

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.

Sales Growth

A company’s long-term sales performance can indicate 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 impressive 11.4% 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 12.2% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong.

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 $14.3 billion in the latest quarter and averaged 9.7% year-on-year growth over the last two years. Because this number is lower than its revenue growth, we can see the company fulfilled orders at a faster rate than it added new orders to the backlog. This implies MasTec was operating efficiently but raises questions about the health of its sales pipeline.

This quarter, MasTec reported modest year-on-year revenue growth of 3.8% but beat Wall Street’s estimates by 2.4%. Company management is currently guiding for flat sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 7.8% over the next 12 months, a deceleration versus the last two years. We still think its growth trajectory is satisfactory given its scale and indicates the market sees success for its products and services.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

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 2.7 percentage points over the last five years. This raises an eyebrow 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 costs were rising and that it couldn’t pass them onto its customers.

Earnings Per Share

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.

Sadly for MasTec, its EPS declined by 6.6% annually over the last five years while its revenue grew by 11.4%. 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 declined by 2.7 percentage points over the last five years. Its share count also grew by 3.9%, 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 more recent period because it can provide insight into an emerging theme or development for the business.

For MasTec, its two-year annual EPS growth of 12.7% was higher than its five-year trend. This acceleration made it one of the faster-growing industrials companies in recent history.

In Q4, MasTec reported EPS at $1.44, up from $0.66 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects MasTec’s full-year EPS of $3.90 to grow 34.2%.

Key Takeaways from MasTec’s Q4 Results

We enjoyed seeing MasTec beat analysts’ EPS expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. On the other hand, its full-year EBITDA guidance missed significantly and its revenue guidance for next quarter fell short of Wall Street’s estimates. Zooming out, we think this was a mixed quarter with something for the bulls and something for the bears. The stock remained flat at $127.50 immediately after reporting.

Is MasTec an attractive investment opportunity right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.