Quanta trades at $616.95 and has moved in lockstep with the market. Its shares have returned 8.7% over the last six months while the S&P 500 has gained 12.7%.
Is now a good time to buy PWR? Find out in our full research report, it’s free.
Why Is PWR a Good Business?
A construction engineering services company, Quanta (NYSE: PWR) provides infrastructure solutions to a variety of sectors, including energy and communications.
1. Surging Backlog Locks In Future Sales
Investors interested in Energy Products and Services companies should track backlog in addition to reported revenue. This metric shows the value of outstanding orders that have not yet been executed or delivered, giving visibility into Quanta’s future revenue streams.
Quanta’s backlog punched in at $53.44 billion in the latest quarter, and over the last two years, its year-on-year growth averaged 25.2%. This performance was fantastic and shows the company has a robust sales pipeline because it is accumulating more orders than it can fulfill. Its growth also suggests that customers are committing to Quanta for the long term, enhancing the business’s predictability. 
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Quanta’s astounding 24.4% annual EPS growth over the last five years aligns with its revenue performance. This tells us its incremental sales were profitable.
3. Increasing Free Cash Flow Margin Juices Financials
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.
As you can see below, Quanta’s margin expanded by 7 percentage points over the last five years. The company’s improvement shows it’s heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. Quanta’s free cash flow margin for the trailing 12 months was 7.5%.
Final Judgment
These are just a few reasons why we think Quanta is an elite industrials company. At $616.95 per share (or 34.4× forward P/E), is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
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