IBD Stock Analysis
- Breaking above downward trend line, with Early entry at 113.21
- Relative strength line at record highs
Industry Group Ranking
* Not real-time data. All data shown was captured at
2:21PM EST on
PWR stock is the IBD Stock Of The Day as the engineering and construction services contractor, primarily for gas and electric utilities, seized an early buy point amid the nation’s infrastructure upgrade and transition to cleaner sources of energy.
On Feb. 24, Quanta Services (PWR) easily beat earnings estimates for the fourth quarter of 2021. The Houston-based company also gave a strong outlook for full-year 2022.
In addition, Quanta Services announced a new Renewable Energy segment, which includes services for solar and wind projects. Its other segments include Electric Power (59% of revenue) and Underground Utility and Infrastructure Solutions (27% of revenue).
The bipartisan $1.2 trillion infrastructure bill enacted in November includes $65 billion to upgrade the electric grid, including solar and wind expansion. It also includes $7.5 billion to build charging stations for electric vehicles.
“We believe Quanta is developing strong leadership positions across these service areas,” CEO Duke Austin said in the Feb. 24 earnings release.
However, Quanta stock on Tuesday broke above a downward trendline as well as the March 3 high. That offers an early entry at 113.21. With PWR stock already in the seventh week of its advance, and the traditional buy point still more than 8% away, aggressive investors will have a keen interest in the early entry point.
PWR Stock Technical Analysis
Keep in mind, while the overall market’s attempted uptrend remains intact, it has not yet broken from its current status of “market in correction.” That means all but the most risk-tolerant investors are best advised to remain in cash and on the sidelines until a follow-through day launches a fresh confirmed uptrend.
However, PWR stock has climbed firmly above its 10-week and 40-week moving averages. The major stock indexes broke below those support levels in January and February amid fears about Russia, inflation and rising interest rates.
In 2021, Quanta Services stock successfully broke out in August. It went on to peak in November, then slid amid a broad sell-off in early 2022. IBD highlighted PWR stock as it was breaking out in August on infrastructure spending hopes.
On the daily chart, the relative strength line for Quanta Services bolted to a new high Tuesday, according to MarketSmith charts. That is a bullish sign and is marked by a blue circle at the end of the RS line.
A rising RS line means that a stock is outperforming the S&P 500. That strength indicator for PWR stock has moved to all-time highs after starting to rally in mid 2020.
Quanta Services earns a superior IBD Composite Rating of 93 out of 99. The Comp Rating combines key fundamental and technical metrics in a single easy-to-use score.
It shows a Relative Strength Rating of 86 out of a possible 99. That means it has outperformed 86% of all stocks in the past year.
Quanta Services Earnings and Fundamental Analysis
For Q4 2021, Quanta Services delivered a 26% earnings per share increase, year over year. Sales rebounded 35% after a Covid-19 pandemic hit the prior year. The company beat earnings views for a 10th straight quarter. It has a more mixed record on sales beats.
In all of 2021, Quanta earnings jumped 29% as sales bounced 16%. Wall Street expects Quanta earnings to rise 27% in 2022 as sales jump 25%. Both earnings and sales are seen growing in 2023, but at a slower pace.
Quanta boasts a 90 EPS Rating, which is well above the 80 or higher that CAN SLIM investors would want to see. It’s also the fourth-highest rank among 21 peers in the Building-Heavy Construction industry group.
During Q4, Quanta acquired four additional businesses for an aggregate $232.6 million as it aims to leverage growth. All told, Quanta completed 10 acquisitions during 2021 and seven in 2020.
As the nation moves toward a carbon-neutral economy, Quanta’s recent Blattner acquisition especially “positions the company to be a leader in facilitating North America’s energy transition,” CEO Austin said on Feb. 23.
Shares are well traded and have decent institutional support. As of December, 1,191 funds owned PWR stock, though that number was down by six from March.
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