Today we're going to take a closer look at large-cap Industrials company Quanta Services, whose shares are currently trading at $207.03. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
Quanta Services Has Elevated P/B and P/E Ratios:
Quanta Services, Inc. provides infrastructure solutions for the electric and gas utility, renewable energy, communications, and pipeline and energy industries worldwide. The company belongs to the Industrials sector, which has an average price to earnings (P/E) ratio of 22.19 and an average price to book (P/B) ratio of 4.06. In contrast, Quanta Services has a trailing 12 month P/E ratio of 44.2 and a P/B ratio of 5.02.
Quanta Services's PEG ratio is 1.59, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
The Company May Be Profitable, but Its Balance Sheet Is Highly Leveraged:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $11,171 | $12,112 | $11,203 | $12,980 | $17,074 | $19,515 |
| Revenue Growth | n/a | 8.42% | -7.51% | 15.87% | 31.54% | 14.3% |
| Operating Margins | 5% | 5% | 5% | 5% | 5% | 5% |
| Net Margins | 3% | 3% | 4% | 4% | 3% | 4% |
| Net Income (MM) | $296 | $407 | $452 | $492 | $512 | $711 |
| Net Interest Expense (MM) | $37 | $83 | $45 | $69 | $124 | $175 |
| Depreciation & Amort. (MM) | $203 | $218 | $225 | $256 | $354 | $312 |
| Earnings Per Share | $1.9 | $2.73 | $3.07 | $3.34 | $3.32 | $4.69 |
| Diluted Shares (MM) | 154 | 148 | 145 | 145 | 148 | 150 |
| Capital Expenditures (MM) | $294 | $262 | $260 | $386 | $428 | $398 |
| Current Ratio | 1.84 | 1.69 | 1.68 | 1.5 | 1.63 | 1.61 |
| Total Debt (MM) | $1,106 | $1,367 | $1,189 | $4,999 | $4,498 | $5,607 |
| Net Debt / EBITDA | 1.38 | 1.51 | 1.2 | 5.19 | 3.32 | 3.85 |
Quanta Services has growing revenues and increasing reinvestment in the business and average operating margins with a stable trend. Additionally, the company's financial statements display a strong EPS growth trend and irregular cash flows. However, the firm has a highly leveraged balance sheet.
