A 5-Day Losing Streak Has Quanta Services Stock Down 15%

A five-day slide has erased significant value from the stock, but its underlying business metrics send mixed signals to investors.

Quanta Services (PWR) stock has now moved lower for 5 consecutive trading days, posting a cumulative loss of 15%. That slide has erased about $16 billion from the company's market value, which now stands at about $93 billion.

This recent drop accounts for nearly all of the stock's -14.7% return over the last three months. Yet despite the severity of this streak, the stock remains up +63.2% over the trailing twelve months.

PWR Versus The S&P 500, Streak And Beyond

Here is how PWR stock stacks up against the S&P 500 over the streak and the periods around it:

The stock's fundamentals present a conflicting picture.

The decline is largely specific to the company; over the same 5 trading days, the S&P 500 returned -1.2%. While the streak is notable, it is not unique, as 20 OTHER S&P 500 stocks are currently on losing streaks of 5 days or more.

From a business perspective, the market may be weighing contradictory signals. Revenue over the last twelve months grew 26.3%, far outpacing the S&P 500 median of 8.4%. However, its operating margin of 6.1% is well below the median of 18.4%. The stock also trades at a price-to-earnings multiple of 69.8, a premium to the S&P 500 median of 23.5.

A streak is a prompt to re-evaluate, not a command to act.

A sustained move in one direction is information. It tells you that market attention and momentum have been focused, at least temporarily. It is not, however, an instruction to buy, sell, or hold.

The disciplined approach is to use a streak as a trigger to check the business against its price. The fundamental and valuation metrics here provide a starting point for investors to begin that work.

A slide like this always poses the same follow-up: which marked-down stocks are actually worth buying? Our Buy the Dip screen runs that test every day, flagging beaten-down names whose fundamentals still hold up.

Prefer the theme to this single name? An industrials ETF like XLI holds the sector rather than this one name. It is still a concentrated bet on that one theme, though, which is exactly the gap the portfolio below closes.

Falling Prices Test Conviction. Rules Do Not Flinch

A losing streak forces a choice on every holder: sell into weakness, average down, or freeze. All three are emotional answers to what should be an analytical question, and emotions priced at market open are expensive.

The Trefis High Quality (HQ) Portfolio takes the emotion out: about 30 quality businesses screened for the fundamentals that survive bad stretches, held and rebalanced by rules. It has a track record of outpacing a benchmark that combines the three major indices - the S&P 500, S&P Mid-cap, and Russell 2000. Let the rules do the flinching for you.