Tom Konrad, CFA
For clean electricity to flourish, the electric grid needs not only to be smarter, but more robust. This is where my strong grid stocks come in. But stringing wires for power is a lot like stringing wires for telecommunications as well a large number of other businesses which do not have much to do with the energy trends I hope will boost the long term prospect of these companies. Knowing how much these companies earn from grid infrastructure helps predict how much they will benefit from the trend.
Unlike many of the financial statistics I’ve been looking at in this series, companies have a great deal of leeway in defining their operating segments. Not a single company I looked at has a electric grid infrastructure segment, let alone a “strong grid” segment. Hence the numbers presented in the following table are subjective, based on my judgment as to what constitutes grid or clean energy related activity.
The information on which I’ve based these judgment calls often comes from investor presentations, many of which tend to include a slide on business segments. When I was unable to find a suitable investor presentation, I looked at a company’s most recent annual report, where segment data is often included in the notes to the financial statements.
In terms of what constitutes grid infrastructure, I attempted to exclude any non-electrical wiring, as well as any electrical work inside buildings. I made other judgement calls along the way, especially when I had to determine how much of a specific segment to attribute to grid infrastructure. I made a note “unhelpful segmant data” when I felt my guesses were particularly questionable.
That said, here are my guesstimates:
|Company||% Grid Infrastructure||Notes|
|ABB, Ltd (ABB)||30-60%||Unhelpful segment data|
|American Superconductor (AMSC)||10-20%||Mostly a wind company (for now)|
|AZZ Incorporated (AZZ)||50-60%||Strong Grid Part III AZZ & EME|
|General Cable (BGC)||55-65%||Strong Grid Part IV: BGC|
|Hubbell, Inc (HUB-B)||20-30%||Strong Grid Part V: HUB-A & HUB-B
|Jinpan International (JST)||40-70%||Unhelpful segment data|
|MasTec (MTZ)||20-30%||Plans to grow grid segment|
|MYR Group (MTRG)||65-75%|
|Pike Electric (PIKE)||90-100%||The closest to a “Pure Play”|
|Quanta Services (PWR)||50-60%|
|Siemens (SI)||10-20%||Unhelpful segment data|
|Valmont Industries (VMT)||20-30%|
|WESCO International (WCC)||10-20%|
DISCLOSURE: Long BGC.
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