The company will acquired Pacer Construction and its affiliated operating companies for about $126 million in cash and a five-year contingent earn-out. Pacer is "a leading contractor" in Western Canada according to MasTec, which focuses on infrastructure construction to support the oil and gas production/processing, mining, and transportation industries. The acquisition will help MasTec expand its presence in the Canadian oil sands.'
MasTec also announced that it amended to senior secured credit facility, increasing the aggregate borrowing commitments to $1 billion from $750 million. The changes also include the ability to borrow in Mexican Pesos in addition to Canadian Dollars.
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TheStreet Ratings team rates MASTEC INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate MASTEC INC (MTZ) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 13.1%. Since the same quarter one year prior, revenues slightly increased by 4.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- MASTEC INC's earnings per share declined by 17.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MASTEC INC increased its bottom line by earning $1.74 versus $1.43 in the prior year. This year, the market expects an improvement in earnings ($1.97 versus $1.74).
- MTZ's debt-to-equity ratio of 0.87 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.47 is sturdy.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Construction & Engineering industry and the overall market on the basis of return on equity, MASTEC INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The gross profit margin for MASTEC INC is currently extremely low, coming in at 12.76%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.66% trails that of the industry average.
- You can view the full analysis from the report here: MTZ Ratings Report