Quanta Services scores 66 for management and 98 for moat. The management score rests on a return on invested capital of 7.1% and a gross margin of 13.0% — figures that describe a business earning a respectable return on what it employs. Debt sits at 0.72x equity. A wide moat alongside strong management is a combination worth understanding before the price matters at all.
The valuation runs on assumptions chosen to understate rather than flatter. Growth is modelled at 15.0% a year, below the 20.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 30.0x. That produces an intrinsic value of $261.90, a 10-CAP price of $172.35 and a payback time price of $272.07, with the value zone set at the highest of the three, $272.07. Today's price of $662.60 is 144% above it.
A wonderful business at the wrong price is still the wrong price. Quanta Services scores well on the business and poorly on the entry point, which is the most common shape in a long bull market.
| Price | $662.60 |
| Market cap | $99.6B |
| P/E ratio | 75.9x |
| Return on invested capital | 7.1% |
| Gross margin | 13.0% |
| Debt to equity | 0.72x |
| Free cash flow yield | 2.5% |
| Growth rate used | 15.0% |
| Growth rate measured | 20.0% |
| Exit multiple assumed | 30.0x |
| Company | Moat | Buy price |
| Comfort Systems USA, Inc. (FIX) | 100 | $1,019.53 |
| Ferrovial SE (FER) | 69 | $56.45 |
| EMCOR Group, Inc. (EME) | 90 | $405.42 |
| MasTec Inc. (MTZ) | 62 | $94.05 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Quanta Services rather than accepting ours.