PWR

We rate QUANTA SERVICES, INC. (PWR) as a Hold with a composite score of 52.5/100 at a current price of $570.94. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in momentum (81th percentile) and stability (65th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (26th percentile) and value (27th percentile) tempers our overall conviction. We assign a Narrow Moat rating (66/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: balance sheet deleveraging progress; sustainability of the current growth rate; valuation compression risk if growth disappoints. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

QUANTA SERVICES, INC. holds a top-quartile position (#0 of 50) within the Construction sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 52.5/100 places it at rank #1601 in our full 7,333-stock universe. With a $61.7B market capitalization, QUANTA SERVICES, INC. operates at meaningful scale within the Construction sector, providing competitive advantages in distribution, procurement, and customer reach.

The near-term outlook is constructive, with revenue growing at 36% and momentum in the 81th percentile confirming positive market sentiment and institutional accumulation. The combination of strong top-line growth and favorable price dynamics suggests the company is executing well on its growth strategy. Investment factor at the 26th percentile indicates reinvestment patterns that investors should monitor for sustainability.

The margin cascade tells an important story: gross margins of 15% (-8.8pp vs sector) narrow to operating margins of 6% (-1.7pp vs sector) and net margins of 3.7%, yielding a gross-to-net conversion rate of 25%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $570.94, QUANTA SERVICES, INC. is trading at a premium to fundamental value. Our value factor score of 27/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 80.5x (a 321% premium to the sector median of 19.1x), EV/EBITDA of 52.9x (at a premium), P/B of 9.1x, P/S of 3.0x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Medium uncertainty rating to QUANTA SERVICES, INC.. The stock presents a balanced risk profile: significant leverage (176% debt-to-equity) and elevated valuation multiple (P/E 80.5x) that leaves limited margin for error. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: significant leverage (176% debt-to-equity); elevated valuation multiple (P/E 80.5x) that leaves limited margin for error; the combination of leverage (176% D/E) and thin margins (3.7% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 65th percentile and quality factor at the 43th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (65th percentile) suggests predictable business dynamics; large-cap scale ($61.7B) provides resilience. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate QUANTA SERVICES, INC.'s capital allocation as Poor. Key concerns include elevated leverage (176% D/E). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — QUANTA SERVICES, INC. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, QUANTA SERVICES, INC. receives a Hold rating with a composite score of 52.5/100 (rank #1601 of 7,333). Our quantitative framework assigns a Narrow Moat (66/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 48/100.

Our analysis supports a neutral stance on QUANTA SERVICES, INC.. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.