With a notable daily gain of 11.87% and a three-month gain of 43.59%, MasTec Inc (MTZ, Financial) presents an intriguing case for investors. Despite these impressive gains, the company reports a Loss Per Share of $0.14. This raises a critical question: is MasTec currently undervalued? This article delves into the valuation of MasTec, encouraging readers to explore the detailed financial analysis that follows.
Company Overview
MasTec is a prominent infrastructure construction company primarily operating in North America. The firm specializes in the engineering, construction, installation, maintenance, and upgrade of essential services across several industries including communications, oil and gas, and renewable energy. MasTec's business is segmented into communications, clean energy and infrastructure, oil and gas, power delivery, and other sectors. Currently, MasTec's stock price stands at $101.8, against a GF Value (GuruFocus' estimation of fair value) of $119.68, suggesting that the stock might be modestly undervalued.
Understanding GF Value
The GF Value is a unique measure calculated to represent the intrinsic value of a stock. This valuation is based on historical trading multiples, an adjustment factor from GuruFocus reflecting past performance and growth, and projected future business performance. If MasTec's stock price significantly deviates from this GF Value, it could indicate that the stock is either overvalued or undervalued, influencing potential future returns. Presently, MasTec's stock price is below its GF Value, suggesting potential for higher future returns relative to its current market price.
Financial Strength and Stability
Investing in companies with robust financial health is crucial to avoid potential capital losses. MasTec's cash-to-debt ratio stands at 0.15, which is lower than many of its peers in the construction industry. This metric, along with a GuruFocus financial strength rating of 5 out of 10, indicates a fair balance sheet but suggests areas for improvement.
Profitability and Growth Prospects
Profitability is a key indicator of a company's financial health. MasTec has maintained profitability over the past decade, although its operating margin of 0.67% is relatively low compared to industry standards. The company's revenue over the past twelve months totaled $12.10 billion, with a reported Loss Per Share of $0.14. Additionally, MasTec's growth metrics, including a 21.7% average annual revenue growth, position it favorably within the construction sector.
Return on Investment Capital Analysis
Comparing the Return on Invested Capital (ROIC) and the Weighted Average Cost of Capital (WACC) provides insights into how effectively a company is generating returns relative to its capital costs. For MasTec, the ROIC is currently at 0.62, significantly lower than its WACC of 11.55, suggesting inefficiencies in generating adequate returns on investments.
Conclusion
In conclusion, MasTec (MTZ, Financial) appears to be modestly undervalued based on GuruFocus' comprehensive analysis. While the company shows fair financial health and profitability, its growth and ability to generate returns on invested capital are areas for potential improvement. For investors looking for more detailed financial data or interested in similar investment opportunities, visiting MasTec's 30-Year Financials and the GuruFocus High Quality Low Capex Screener can provide additional insights.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.