MasTec (MTZ) builds energy infrastructure in the United States and has exposure to some of the fastest growing verticals in the industry, winning project awards in 2012 for its transmission business and also dominating in the midstream pipeline market, says Noelle Dilts, Vice President at Stifel, Nicolaus & Co., Inc.
“MasTec is little bit more diversified than Quanta, but about 20% to 30% of its sales are exposed to oil, gas and NGL pipelines, and this company actually has what we think is a dominant position in the shale midstream pipeline market, which is a very positive place to be right now. About 10% of the company’s sales are exposed to transmission, where it’s an emerging player, but it’s recently been winning a lot of work and has seen a number of major project awards in the second half of 2012. We believe they are gaining share in the transmission market,” Dilts.
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Dilts adds that MTZ has about 17% of sales exposed to the wireless infrastructure construction, and its largest customer is AT&T (T), a wireless carrier poised to significantly invest in its network to support the proliferation of data usage, which should support strong growth over the next few years.
“The pipeline, transmission and wireless businesses are some of MasTec’s highest margin businesses, so the strong growth in these markets should drive a positive mix shift. MasTec’s only business with a weak outlook for 2013 is its wind farm construction business, which accounts for about 10% of sales and is the lowest margin business in the firm. We actually think that business could have a pretty strong bounceback in 2014 given the timing of the renewal of the wind tax credit,” Dilts said.
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