Analyzing Quanta Services (NYSE:PWR) and VSE (NASDAQ:VSEC)

VSE (NASDAQ:VSEC) and Quanta Services (NYSE:PWR) are both construction companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, earnings, valuation, dividends, profitability, risk and analyst recommendations.

Analyst Ratings

This is a breakdown of current ratings and price targets for VSE and Quanta Services, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
VSE	0	1	6	0	2.86
Quanta Services	0	13	12	0	2.48

VSE currently has a consensus target price of $197.17, suggesting a potential upside of 16.79%. Quanta Services has a consensus target price of $438.64, suggesting a potential upside of 1.14%. Given VSE’s stronger consensus rating and higher possible upside, equities analysts clearly believe VSE is more favorable than Quanta Services.

Institutional & Insider Ownership

91.5% of VSE shares are owned by institutional investors. Comparatively, 90.5% of Quanta Services shares are owned by institutional investors. 14.6% of VSE shares are owned by company insiders. Comparatively, 1.1% of Quanta Services shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

VSE has a beta of 1.39, suggesting that its share price is 39% more volatile than the S&P 500. Comparatively, Quanta Services has a beta of 1.1, suggesting that its share price is 10% more volatile than the S&P 500.

Earnings & Valuation

This table compares VSE and Quanta Services”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
VSE	$1.33 billion	2.92	$15.32 million	$0.68	248.26
Quanta Services	$27.19 billion	2.38	$904.82 million	$6.75	64.25

Quanta Services has higher revenue and earnings than VSE. Quanta Services is trading at a lower price-to-earnings ratio than VSE, indicating that it is currently the more affordable of the two stocks.

Dividends

VSE pays an annual dividend of $0.40 per share and has a dividend yield of 0.2%. Quanta Services pays an annual dividend of $0.40 per share and has a dividend yield of 0.1%. VSE pays out 58.8% of its earnings in the form of a dividend. Quanta Services pays out 5.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Quanta Services has increased its dividend for 6 consecutive years.

Profitability

This table compares VSE and Quanta Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
VSE	1.23%	7.64%	4.52%
Quanta Services	3.73%	18.41%	7.15%

Summary

Quanta Services beats VSE on 9 of the 17 factors compared between the two stocks.

About VSE

VSE Corporation operates as a diversified aftermarket products and services company in the United States. The company operates through two segments, Aviation and Fleet. The Aviation segment provides aftermarket parts supply and distribution; maintenance, repair, and overhaul services for components and engine accessories supporting commercial, business, and general aviation operators. This segment serves commercial airlines, regional airlines, cargo transporters, MRO integrators and providers, aviation manufacturers, corporate and private aircraft owners, and fixed-base operators. The Fleet segment offers parts supply, inventory management, e-commerce fulfillment, logistics, supply chain support, and other services to support the commercial aftermarket medium- and heavy-duty truck market. This segment also provides sale of vehicle parts and supply chain services to support client truck fleets, as well as sustainment solutions and managed inventory services to government and commercial truck fleets. VSE Corporation was incorporated in 1959 and is headquartered in Alexandria, Virginia.

About Quanta Services

Quanta Services, Inc. provides infrastructure solutions for the electric and gas utility, renewable energy, communications, and pipeline and energy industries in the United States, Canada, Australia, and internationally. The company’s Electric Power Infrastructure Solutions segment engages in the design, procurement, construction, upgrade, repair, and maintenance of electric power transmission and distribution infrastructure and substation facilities; installation, maintenance, and upgrade of electric power infrastructure projects; installation of smart grid technologies on electric power networks; and design, installation, maintenance, and repair of commercial and industrial wirings. This segment also offers aviation services; emergency restoration services; and other engineering and technical services; design and construction solutions to wireline and wireless communications, cable multi-system operators, and other customers; and training for electric workers, as well as training for the gas distribution and communications industries. The company’s Renewable Energy Infrastructure Solutions segment is involved in engineering, procurement, construction, repair, and maintenance of wind, solar, and hydropower generation facilities, as well as battery storage facilities; and provision of engineering and construction services for substations and switchyards, transmission, and other electrical infrastructures. The company’s Underground Utility and Infrastructure Solutions segment offers design, engineering, procurement, construction, upgrade, repair, and maintenance services for natural gas systems for gas utility customers; fabrication services for pipeline support systems and structures and facilities; and engineering and construction services for pipeline and storage systems, and compressor and pump stations. The company was formerly known as Fabal Construction, Inc. and changed its name to Quanta Services, Inc. in November 1997. The company was incorporated in 1997 and is headquartered in Houston, Texas.