Quanta Services Inc (PWR)

Conclusion

Quanta Services provides infrastructure solutions for electric and gas utilities, power generation, communications, pipeline and other energy customers, mainly through its electric and underground utility segments. The shares were priced at 591.48 USD on 2026-11-09, giving a market capitalisation of 89.1 billion USD and an enterprise value of 94.3 billion USD.

The verdict is overvalued. The fair value band runs from 356.85 to 535.27 USD with a midpoint of 446.06 USD, and the margin of safety is -24.6% at the current price. Today's P/E of 52.6 compares with a ten-year median of 31.3, and EV/EBITDA of 25.7 with a median of 16.2. The discounted cash flow gives 539.86 USD per share, and the fair value from historical multiples is 352.27 USD. The reverse DCF implies revenue-type growth of 16.2% a year, against revenue growth of 20.4% over five years and free cash flow per share growth of 12.7%.

What holds the case up is the balance sheet and the track record. The Altman Z-score is 4.24, interest coverage is 8.37x, free cash flow conversion is 186.4% on a trailing basis, and the company beat earnings estimates in all eight of the last quarters. The weakest numbers are the price-to-book ratio of 8.46 against a median of 2.97, the P/E premium of 67.9%, and the return on invested capital of 12.3% against a WACC of 10.7%, which leaves a spread of only 1.6 percentage points. Should growth slow toward the implied rate, the premium multiples are exposed.

Financial health

Financial strength is green, held up by the Altman Z-score of 4.24, net debt to EBITDA of 1.42x and interest coverage of 8.37x, and pulled down by nothing scored as bad, with only the current ratio of 1.16 marked neutral. The quick ratio is 1.05 and debt to equity is 0.71. The Altman Z-score sits in the safe zone, although that model was designed for manufacturers and this is an engineering and construction business, so it should be read with that in mind. Insolvency risk: low, about 0.8% by the estimate of the Ohlson model over one to two years. The current ratio is flagged as watch, so short-term liquidity is the thinnest part of the balance sheet, and the company does not report a debt maturity schedule in this data.

Earnings quality

Earnings quality is yellow. Free cash flow conversion is strong at 186.4% trailing and 140.5% over five years, and the accrual ratio of -5.5% suggests cash earnings run ahead of reported profit. Stock-based compensation is 0.66% of revenue, leaving free cash flow after it at 2.91 billion USD. The share count has risen at 0.9% a year over five years, so there are no net buybacks. The Piotroski score is 4 out of 9. The Beneish M-score is not available. The company beat estimates in eight of eight quarters, with an average surprise of 13.9%, and analysts raised current-year estimates by 8.8% over 90 days and next-year estimates by 13.2%, with no downgrades in the last 30 days.

Profitability

Profitability is yellow. Gross margin is 15.1% against a ten-year median of 12.8%, operating margin is 6.8% against 5.3%, and net margin is 4.5% against 3.5%. The operating margin is above its median, which scores well. ROIC is 12.3% against a WACC of 10.7%, a ROIC minus WACC of 1.6 percentage points, marked neutral, and the five-year median ROIC is 8.4%. Return on equity is 16.1%, but the DuPont split shows an equity multiplier of 2.79 alongside a net margin of 3.6% and asset turnover of 1.14 for 2025. Leverage therefore contributes materially to the return on equity, and the underlying return on capital is more modest.

Growth

Growth is green. Revenue compound growth is 18.4% over three years, 20.4% over five and 14.1% over ten. Earnings per share grew at 26.9% over three years, 17.2% over five and 15.6% over ten. Free cash flow per share grew at 31.1% over three years, 12.7% over five and 17.1% over ten. Revenue rose in 9 of the 10 comparable years. Analysts expect next-year earnings per share growth of 19.1%, which sits above the ten-year earnings growth and supports the current growth rating, though the price already assumes much of that path.

Valuation

Valuation is red, with the verdict overvalued and a margin of safety of -24.6%. Against ten-year medians, the P/E is 52.6 versus 31.3, a premium of 67.9%; EV/EBITDA is 25.7 versus 16.2, a premium of 58.5%; price-to-sales is 2.39 versus 1.16, a premium of 105.8%; and price-to-book is 8.46 versus 2.97, a premium of 184.7%. Price to free cash flow is 28.2 against 34.8, a discount of 18.8%. The discounted cash flow gives 539.86 USD per share at a discount rate of 11.3%, with 52.8% of value in the terminal period. The fair value from historical multiples is 352.27 USD. The fair value band is built on fixed assumptions, not a price target. The reverse DCF implies growth of 16.2% against five-year revenue growth of 20.4%. The dividend yield is 0.07%, with a payout on free cash flow of 2.1%.

Risks

The main risk is valuation: if growth slows toward the implied rate, the premium multiples have less support, and the price sits above every fair value estimate in this analysis. A weaker return on capital would narrow the 1.6 percentage point spread over WACC and reduce the case for premium pricing. A tighter current ratio of 1.16 leaves less room in short-term liquidity. Earnings quality depends on continued cash conversion, and the Piotroski score of 4 gives little margin for error. The Beneish M-score is not available, and the company does not report a debt maturity schedule or revenue by segment, so refinancing exposure and segment mix cannot be assessed here. The Altman model's manufacturing basis also limits its reading for this business.