Quanta (PWR): +17% On A Record Quarter — But It Blew Past Its Own 2030 Plan. Is PWR a Buy?

Quanta Services, Inc. (PWR) Q2 2026 — Reported July 30, 2026 pre-open. Revenue $9.557B (+41.1%) vs ~$8.61B expected — an 11% beat. Adjusted diluted EPS $4.24 vs $3.31 expected and $2.48 a year ago (+71%); GAAP EPS $2.96 vs $1.52. Adjusted EBITDA $1,066.5M (+59.5%), an 11.2% margin. Both segments expanded margin: Electric $7.84B (+43.6%) at 11.5% vs 10.1%, Underground $1.72B (+30.7%) at 9.1% vs 6.9%. Record Q2 free cash flow $886M vs $170M. Firm orders (RPO) $33.55B, +75.1%; total backlog $53.44B. Full-year guidance raised across every line — adjusted EPS to $16.45-16.95 from $13.55-14.25. The stock fell 14.2% into the print, then rose 17.26% on it to $657.98, closing the week at $667.36. The thing nobody put next to this quarter: Quanta's own Investor Day, four months earlier. On March 31, 2026 it targeted 7-10% ORGANIC revenue growth implying $44-49B of revenue by 2030, and adjusted EPS of $21.60-$26.75 by 2030. This quarter guided 2026 revenue to $39.3-39.7B and adjusted EPS to $16.45-16.95. The five-year plan was largely covered in one year. Those targets will be raised, but from here they imply a ~4% revenue CAGR and 6.6-12.5% EPS growth, while the stock trades at 40x this year and 25.9x EV/adjusted EBITDA. THE CALL: TRIM (3/5, A GREAT COMPANY THAT OUTGREW ITS OWN PLAN) — base-case value ~$500.0 vs ~$667.36 today. KEY METRICS: - CALL: TRIM 3/5 — fair value ~$500 vs $667.36 (-25%). DCF at 9.5% on 152.4M diluted shares less $5.70B net debt + minorities: BEAR $294 (FCF +10% then +6%), BASE $509 (+17% then +11%, 3% terminal), BULL $700 (+22% then +14%). Weighted 25/50/25 = $503. Cross-check on management's OWN 2030 EPS target: $24.18 at 25x discounted back 4 years = $420; $26.75 at 28x = $521. - REVERSE DCF: at $667.36 the EV is $107.4B — 2.72x guided revenue, 25.9x guided adjusted EBITDA, 40x guided adjusted EPS. At 9.5% that price asks Quanta to compound free cash flow at 17.7% a year for TEN straight years, against management's own 7-10% organic plan. To earn 9.5% you need 2030 adjusted EPS of roughly $34-$44 — 20-27% a year for four years. - THE QUARTER: revenue $9,556,997K (+41.1%). Operating income $694.8M, a 7.3% margin vs 5.5%. Net income to common $451.4M (+96.9%). GAAP diluted EPS $2.96 vs $1.52. Adjusted diluted EPS $4.24 vs $2.48. Adjusted EBITDA $1,066.5M, an 11.2% margin vs 9.9%. Effective tax rate a normal 25.5%. Diluted shares 152.4M. - BACKLOG QUALITY — the under-covered number: remaining performance obligations (FIRM fixed-price orders) went $19.16B to $33.55B, UP 75.1%. Estimated MSA orders went $16.68B to $19.89B, up only 19.2% — and DOWN 1.6% from December. ALL of the backlog growth is the firm half. 12-month backlog $32.31B (+61.2%); a year ago that measure was $20.05B and the next four quarters produced $32.78B, 1.64x. - THE RAISE WAS MOSTLY ORGANIC — the strongest bull point: FY26 revenue guidance rose $4.55B at the midpoint and adjusted EPS 20%, while the four new acquisitions (Phalcon, Enerfab, Percheron, PSD; ~$1.24B upfront) are expected to add only $1.2-1.4B of revenue. Roughly three quarters of the raise is execution, not deals. - EARNINGS QUALITY: adjusted EPS is 43.2% above GAAP. Bridge: $1.03 intangible amortization, $0.42 stock comp, less $0.45 tax. Amortization $157.0M (+38.7%) grows with revenue — the recurring cost of the acquisition model. But no tax trick: 25.5% rate, and GAAP EPS still rose 94.7%. - CASH: H1 operating cash flow $1,487M vs $539M; free cash flow $1,070M vs $288M — and real: working capital was a net SOURCE of $105M, DSO 81 days vs 80. Capex only 2.6% of revenue. But cash paid for acquisitions was $930M — 87% of the free cash flow — and sits in investing, so it is never deducted. ~$5B of purchase price committed in 12 months. - BALANCE SHEET: goodwill $7.87B + intangibles $3.22B = 39% of $28.29B of assets vs $9.64B of equity, so tangible book is NEGATIVE $1.45B. Net debt $5.60B = 1.35x guided adjusted EBITDA. Moody's upgraded to Baa2 from Baa3 in June. New $1B buyback authorized in May; the prior program bought only 540,788 shares for ~$135M. - SEGMENTS (two, not three — Renewable Energy now sits inside Electric, per 10-Q Note 3): Electric $7,837.8M (+43.6%), 82.0% of revenue, 11.5% operating margin vs 10.1%. Underground and Infrastructure $1,719.2M (+30.7%), 9.1% vs 6.9%. - STREET: Buy — 26 buy, 10 hold, 0 sell across 36 analysts. Average target $724.87, median $728, range $575-$940 — only +8.6% above the close. Truist raised to $940 (Buy); Bernstein raised to $748 but kept Market Perform. We DIFFER and are more CAUTIOUS at ~$500. We ALIGN completely on business quality. What to watch: Bullish: 2027 guidance above $46B of revenue and $21 of adjusted EPS in February; or Q3 adjusted EPS above $4.90 on October 29 vs the $4.62 consensus, carried by the organic line. Bearish: firm orders (RPO) flattening — the MSA estimate line already fell 1.6% since December; DSO pushing past 90 days; or a fixed-price project charge. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.