Our $490 target price is based on 40x our 2026 EPS estimate of $12.25. Despite some near-term concerns (mostly related to renewables end market), our premium multiple reflects PWR’s improving visibility given the company's exposure to smaller/base business work (~90% of revenue) as well as improving optionality from larger projects (transmission but also renewables). Additionally, most of PWR's end markets remain fairly resilient (~70% Utilities) supported by LT secular drivers across Electrical Transmission (grid modernization and hardening-related work), communication and renewables end markets, and that coupled with solid execution could over time support growth/margin. The base business could over time grow MSD to HSD and provide more consistent earnings, and PWR’s relatively under-levered balance sheet should provide ample capital deployment flexibility to support earnings.

Project-related timing delays and weather-related execution risks are difficult to forecast. Timing delays could result in growth disappointing versus our expectations, while our margin forecasts could be overly optimistic if project-related execution/macro environment worsens. The recent acquisitions present integration/execution risk that could result in expected accretion lower than we currently model. If the impact on the company from any of these factors proves to be greater than we anticipate, the stock will likely have difficulty achieving our target price.