Quanta Services Inc., the biggest U.S. power line contractor, rose the most in a year as its earnings beat expectations and damage from the East Coast super-storm Sandy brought the company more work.
Quanta, based in Houston, rose 9.9 percent to $25.93 at the close in in New York. Earlier, it rose as much as 10.5 percent to $26.08, the most since Nov. 2, 2011 and its highest price since Oct. 1, 2008.
Other utility contractors, including MYR Group Inc. and Pike Electric Corp., also rose as investors looked for companies that would benefit from the storm, Andrew Wittmann, an analyst with Robert W. Baird & Co. in Milwaukee, Wisconsin, said in an interview. Pike gained 6.2 percent to $9.11, the most since Aug. 3, and MYR rose 7.2 percent to $21, the most since Aug. 8.
Quanta earned 45 cents a share in the third quarter, compared with 25 cents in the same quarter of 2011, according to a statement today. Excluding one-time costs, the company earned 48 cents a share, 9 cents more than the average of 14 analysts’ estimates compiled by Bloomberg.
Hurricane Sandy, which came ashore Oct. 29 with gusts as high as 90 miles an hour and record flooding, cut a swath the width of Texas through utility grids from Virginia to New England. At the peak, more than 8 million customers were without power, according to the U.S. Energy Department. Consolidated Edison, which provides electricity for New York City, said the storm caused the worst blackout in its history.
Quanta was already having a strong year and now will be able to move workers over to new, higher-profit storm opportunities, Wittmann said.
“They’re sacrificing other, pretty good-margin work, for even better-margin work, ” he said. Wittmann rates Quanta neutral and doesn’t own any shares.
Quanta was able to move “a significant amount of resources” into the region prior to the storm’s arrival, Chief Executive Officer James F. O’Neill said on a call with analysts.
Repair work provides higher profit margins than other types of construction, though it’s too early to estimate how much the company may earn from the cleanup effort, O’Neill said.