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Following stellar third quarter results that included a positive earnings surprise, shares of Comfort Systems USA Inc. (FIX - Snapshot Report) are currently hovering near its 52-week high of $13.05. Earnings for this Zacks #1 Rank (Strong Buy) provider of business solutions are expected to increase 126.7% in 2012 and 25.9% in 2013. With the growth trajectory expected to continue thanks to a diligent execution of its operating strategy, Comfort Systems looks like a solid momentum pick.

Strong Third Quarter

On November 1, Comfort Systems reported strong third quarter results with a 115.3% year-over-year surge in net income to 15 cents per share. This also beat the Zacks Consensus Estimate by 15.4%.

Total revenue increased 2.3% year over year to $335.5 million. The company recorded a positive free cash flow of $13.8 million, compared to a negative $0.8 million in the year-ago quarter. Same-store backlog improved to $570.4 million compared to $636.1 million in the prior-year quarter.

Surge in Earnings Estimate Revisions

Over the past 60 days, the Zacks Consensus Estimate for 2012 increased 3.0% to 34 cents, suggesting a year-over-year increase of 126.7%. The Zacks Consensus Estimate for 2013 is up 2.4% over the same period to 43 cents, representing growth of 25.9% on a year-over-year basis.

Reasonable Valuation

Comfort Systems’ valuation looks a bit expensive on a price-to-earnings (P/E) basis. Shares of Comfort Systems are currently trading at a forward P/E of 29.58x versus the peer group average of 20.00x. A healthy earnings growth prospect in the current year warrants the premium valuation of the company. However, on a price-to-book (P/B) basis, Comfort Systems is currently trading at 1.66x versus 2.19x for the peer group average.

Since November 27, 2012, Comfort Systems shares have fared better than the simple moving average for 50 days or SMA (50). The continuous uptrend in stock prices since late last year offers an enticing upside potential going forward. Volume averages 114K daily.

Comfort Systems offers installation, maintenance, repair and replacement services for heating, ventilation, and air conditioning (HVAC) systems in the mechanical services industry. The company designs, installs, and fine-tunes HVAC systems for a diverse portfolio of commercial, industrial and institutional customers, including downtown high-rises, hospitals, universities, hotels, factories and industrial plants. It also offers specialized application services, such as building automation control systems, fire protection, process cooling, electronic monitoring, and process piping, in addition to providing electrical and plumbing services. The company currently has a market cap of $467.9 million.

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