By Mackenzie Tatananni

Energy provider Quanta Services was among the best-performing stocks in the S&P 500 on Thursday. The contractor benefits from the ramping demand for power in the U.S., but earnings and an upbeat outlook were driving its latest gains.

Houston-based Quanta reported first-quarter financial results on Thursday. Revenue of $6.2 billion handily topped the $5.9 billion analysts were expecting, according to FactSet. Adjusted diluted earnings of $1.78 a share also beat the $1.67 a share Wall Street had forecast.

The stock climbed 9.3% to $319.82 on Thursday after rising even higher earlier in the session. Quanta stock remains up 1.2% this year and more than 25% over past 12 months.

The contractor, which builds and maintains infrastructure for the energy sector, operates through two business segments. The electric segment services clients in the fields of renewable energy, technology, and communications, while the underground and infrastructure segment is tailored to oil and natural gas.

While earnings were strong, Quanta conceded that President Donald Trump's tariffs and the strained relationships with trading partners had led to increased macroeconomic uncertainty, including fears of a recession.

The terms and conditions in Quanta's contracts limit the company's exposure to direct cost increases associated with tariffs. However, the uncertainty could weigh on customers' supply chains and operational costs, which would in turn affect future projects, Quanta said.

To mitigate such risks, the company said it was adjusting its own supply chain by making "strategic advanced purchases" and evaluating additional suppliers in an bid to manage costs and product availability.

In short, Quanta remains cautiously optimistic for now. This optimism spilled over into the company's full-year outlook, with management raising the midpoint of its guidance for several key metrics.

Quanta said it now expects net revenue in the range of $26.7 billion to $27.2 billion and adjusted earnings between $10.05 and $10.65 a share for the year.

Management struck a similarly upbeat tone on the earnings call. CEO and President Duke Austin highlighted "robust double-digit growth" in adjusted earnings before interest, taxes, depreciation, and amortization along with the company's record $35.3 billion backlog.

Chief Financial Officer Jayshree Desai noted that S&P Global Ratings upgraded Quanta's long-term issuer rating and short-term issuer rating during the quarter.

"We believe these credit upgrades lower our borrowing costs, expand our liquidity and financing options, and strengthen our financial position while supporting our long term growth strategy," Desai explained.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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May 01, 2025 15:45 ET (19:45 GMT)

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