Quanta’s (NYSE:PWR) Q1: Beats On Revenue, Stock Soars

Infrastructure solutions provider Quanta (NYSE:PWR) beat Wall Street’s revenue expectations in Q1 CY2025, with sales up 23.9% year on year to $6.23 billion. The company expects the full year’s revenue to be around $26.95 billion, close to analysts’ estimates. Its non-GAAP profit of $1.78 per share was 6.9% above analysts’ consensus estimates.

Is now the time to buy Quanta? Find out by accessing our full research report, it’s free.

"Quanta is pleased to report strong first quarter results, including robust double-digit growth in revenue, adjusted EBITDA and adjusted earnings per share, along with record backlog of $35.3 billion," said Duke Austin, President and Chief Executive Officer of Quanta Services.

Company Overview

A construction engineering services company, Quanta (NYSE:PWR) provides infrastructure solutions to a variety of sectors, including energy and communications.

Sales Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, Quanta’s sales grew at an incredible 15.6% compounded annual growth rate over the last five years. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Quanta’s annualized revenue growth of 19.1% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

We can dig further into the company’s revenue dynamics by analyzing its backlog, or the value of its outstanding orders that have not yet been executed or delivered. Quanta’s backlog reached $35.3 billion in the latest quarter and averaged 23.2% year-on-year growth over the last two years. Because this number is better than its revenue growth, we can see the company accumulated more orders than it could fulfill and deferred revenue to the future. This could imply elevated demand for Quanta’s products and services but raises concerns about capacity constraints.

This quarter, Quanta reported robust year-on-year revenue growth of 23.9%, and its $6.23 billion of revenue topped Wall Street estimates by 6.2%.

Looking ahead, sell-side analysts expect revenue to grow 10.5% over the next 12 months, a deceleration versus the last two years. We still think its growth trajectory is attractive given its scale and suggests the market is forecasting success for its products and services.

Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.

Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Quanta was profitable over the last five years but held back by its large cost base. Its average operating margin of 5.4% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

Analyzing the trend in its profitability, Quanta’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Quanta generated an operating profit margin of 3.8%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Quanta’s EPS grew at an astounding 26.8% compounded annual growth rate over the last five years, higher than its 15.6% annualized revenue growth. However, we take this with a grain of salt because its operating margin didn’t expand and it didn’t repurchase its shares, meaning the delta came from reduced interest expenses or taxes.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Quanta, its two-year annual EPS growth of 22.4% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q1, Quanta reported EPS at $1.78, up from $1.41 in the same quarter last year. This print beat analysts’ estimates by 6.9%. Over the next 12 months, Wall Street expects Quanta’s full-year EPS of $9.33 to grow 14%.

Key Takeaways from Quanta’s Q1 Results

We were impressed by how significantly Quanta blew past analysts’ revenue, EPS, and EBITDA expectations this quarter. We were also glad it raised its full-year guidance, outperforming Wall Street’s estimates. Overall, we think this was a solid quarter with some key metrics above expectations. The stock traded up 6.3% to $310.73 immediately following the results.

Quanta put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.