Quanta Services Inc (NYSE:PWR) Passes Stringent Quality Investment Screen

Infrastructure services provider Quanta Services Inc (NYSE:PWR) has been identified by an investment screening method focused on finding good companies. The Caviar Cruise screen, based on quality investing ideas, looks for businesses with solid past results, high profitability, and good financial condition, working on the idea that holding outstanding companies for a long time is a reasonable way to build wealth. This approach focuses on measurable numbers that show a lasting competitive edge and effective use of money.

Meeting the Main Quality Investing Standards

The Caviar Cruise method uses several strict filters to find quality options. Quanta Services shows good agreement with these main ideas, which are made to find companies with a record of growth and a high chance of continuing it.

• Revenue and Profit Growth: The screen asks for at least a 5% compound annual growth rate (CAGR) for both revenue and EBIT (Earnings Before Interest and Taxes) over five years. Quanta Services does much better than this, with a revenue CAGR of 13.29% and an even higher EBIT CAGR of 17.91%. This difference is important, as it shows the company is not only getting bigger but also making more money, probably because of size efficiencies or the ability to set prices.
• High Return on Capital: A key part of quality investing is a high return on invested capital (ROIC), making sure the company makes good profits from the money it puts in. The screen requires a ROIC (without cash, goodwill, and intangibles) over 15%. Quanta Services meets this with a solid ROIC of 19.04%, pointing to very effective use of capital.
• Controllable Debt and High-Grade Profits: Financial strength is essential. The strategy searches for a Debt-to-Free Cash Flow ratio under 5, showing the company can pay off all its debt with its present cash flow in less than five years. Quanta Services is in a good state with a ratio of 3.49. Also, the screen looks for a 5-year average Profit Quality—which checks how well net income becomes free cash flow—above 75%. Quanta Services goes far beyond this with a number of 138.11%, showing its accounting profits are more than fully turned into actual cash, a mark of very good financial condition.

Fundamental Analysis Summary

An examination of Quanta Services' detailed fundamental report gives a wider view for these particular numbers. The company gets a medium total fundamental score of 5 out of 10, showing a varied situation when measured against its industry counterparts in Construction & Engineering. Its best area is growth, where it gets a high score, backed by the solid past and expected rises in revenue and earnings. Profitability and financial health are scored as medium, with good points on getting better margins and ability to pay debts, but balanced by a Return on Invested Capital that, while acceptable for the screen, is lower than the industry average. The main difficulty seems to be valuation, with the stock seen as costly on several measures, including its Price-to-Earnings ratio.

Fit for Quality Investors

For an investor using a quality strategy, Quanta Services offers a strong argument. The company passes the high standard set by the Caviar Cruise screen, showing it has the basic characteristics quality investors want: steady and profitable growth, high returns on capital, and a strong balance sheet with high-grade earnings. While the present valuation may cause some hesitation, quality investors frequently choose the strength of the business itself instead of short-term price multiples, working on the thought that a better company will justify its valuation over the long term. Quanta's part in providing essential infrastructure solutions for electric power, renewable energy, and communications also fits with the quality investing principle of putting money into businesses backed by long-lasting, persistent trends.

Find Other Quality Investment Options

Quanta Services was found using a particular group of filters made to discover high-grade companies. If this method matches your investment thinking, you can use the Caviar Cruise stock screener to look at other companies that meet these strict conditions.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation to buy or sell any security, or an endorsement of any investment strategy. All investments involve risk, including the possible loss of principal. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.