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Factors That Underscore EMCOR's (EME) Bullish Prospects
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Recently, EMCOR Group’s (EME - Free Report) shares have gained impressively backed by solid construction activities, particularly in the United States, strategic acquisitions and a stable balance sheet position. The company’s U.S. Mechanical and Electrical Construction segments are gaining strength on impressive industry data, reflecting significant market prospects in the near future.
In the past three months, the stock has gained 35.9% compared with the Building Products - Heavy Construction industry’s 26.2% growth and the Zacks Construction sector’s 14.5% rally. In fact, the company has outperformed other industry players like Dycom Industries, Inc. (DY - Free Report) , Great Lakes Dredge & Dock Corporation (GLDD - Free Report) as well as North American Construction Group Ltd. (NOA - Free Report) in the said period.
This outperformance can be primarily attributed to EMCOR’s impressive earnings surprise history and robust year-over-year performance. Notably, the company’s bottom line surpassed the Zacks Consensus Estimate in 16 of the trailing 17 quarters.
A Quick Glance at Q1 Results
Recently, the company posted stellar first-quarter 2021 results, with both the top and bottom lines beating the consensus estimate by 5.6% and 31.6%, respectively. Adjusted earnings of $1.54 per share increased 14.1% and revenues of $2.30 billion grew 0.2% from the year-ago quarter. Solid execution in the U.S. Mechanical Construction segment and disciplined cost control aided EMCOR amid softness in the U.S. Industrial Services segment.
Residential & Non-Residential Construction Businesses a Boon
EMCOR has been delivering solid performance over the last few quarters owing to higher project activity within manufacturing, health care, transportation and institutional markets. Despite being severely hurt by the COVID-19 pandemic in the past year, the construction market parameters have shown resilience of late. Recently, builder confidence and sales numbers have boosted the sentiments of buyers as well as investors. In May, builder confidence for newly built single-family homes remained on par with the April reading of 83, as stated by NAHB/Wells Fargo Housing Market Index.
Importantly, EMCOR’s U.S. Electrical Construction and U.S. Mechanical Construction segments are benefiting from accretive acquisitions as well as higher project activity. Additionally, the company’s U.S. Building Services, U.S. Industrial Services and U.K. Building Services are performing pretty well.
For first-quarter 2021, the U.S. Construction segment delivered robust revenue performance, with a combined 5% year-over-year increase, given solid performance of its U.S. Mechanical Construction segment in commercial, healthcare and institutional markets. Operating margin also improved 110 basis points (bps) year over year.
Strategic Acquisitions
EMCOR consistently acquires assets and businesses in order to expand small private firms with proven management and expansion potential. In first-quarter 2021, the company acquired two companies — one providing mechanical services within the Southern region and the other delivering electrical construction services in the Midwestern region — for a total consideration of $24 million.
Again, EMCOR completed three acquisitions in 2020 and seven buyouts in 2019. These buyouts strengthened its overall results by adding new markets, opportunities and capabilities.
Solid Growth Prospects
EMCOR has strong prospects, as is evident from the Zacks Consensus Estimate for 2021 earnings of $6.70 per share, which has been revised upward in the past 30 days. Moreover, its earnings are expected to increase 4.7% year over year in 2021. The company has also lifted earnings projection to $6.35-$6.75 from $6.20-$6.70 per share projected earlier.
Its revenue guidance for 2021 is expected within $9.2-$9.4 billion. Its revenue guidance for 2021 is expected within $9.2-$9.4 billion, indicating a significant increase from the year-ago figure of $8.8 billion. The consensus mark for the same is pegged at $9.34 billion, signifying 6.1% year-over-year growth. These solid projections make this Zacks Rank #2 (Buy) stock a profitable pick. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Factors That Underscore EMCOR's (EME) Bullish Prospects
Recently, EMCOR Group’s (EME - Free Report) shares have gained impressively backed by solid construction activities, particularly in the United States, strategic acquisitions and a stable balance sheet position. The company’s U.S. Mechanical and Electrical Construction segments are gaining strength on impressive industry data, reflecting significant market prospects in the near future.
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In the past three months, the stock has gained 35.9% compared with the Building Products - Heavy Construction industry’s 26.2% growth and the Zacks Construction sector’s 14.5% rally. In fact, the company has outperformed other industry players like Dycom Industries, Inc. (DY - Free Report) , Great Lakes Dredge & Dock Corporation (GLDD - Free Report) as well as North American Construction Group Ltd. (NOA - Free Report) in the said period.
This outperformance can be primarily attributed to EMCOR’s impressive earnings surprise history and robust year-over-year performance. Notably, the company’s bottom line surpassed the Zacks Consensus Estimate in 16 of the trailing 17 quarters.
A Quick Glance at Q1 Results
Recently, the company posted stellar first-quarter 2021 results, with both the top and bottom lines beating the consensus estimate by 5.6% and 31.6%, respectively. Adjusted earnings of $1.54 per share increased 14.1% and revenues of $2.30 billion grew 0.2% from the year-ago quarter. Solid execution in the U.S. Mechanical Construction segment and disciplined cost control aided EMCOR amid softness in the U.S. Industrial Services segment.
Residential & Non-Residential Construction Businesses a Boon
EMCOR has been delivering solid performance over the last few quarters owing to higher project activity within manufacturing, health care, transportation and institutional markets. Despite being severely hurt by the COVID-19 pandemic in the past year, the construction market parameters have shown resilience of late. Recently, builder confidence and sales numbers have boosted the sentiments of buyers as well as investors. In May, builder confidence for newly built single-family homes remained on par with the April reading of 83, as stated by NAHB/Wells Fargo Housing Market Index.
Importantly, EMCOR’s U.S. Electrical Construction and U.S. Mechanical Construction segments are benefiting from accretive acquisitions as well as higher project activity. Additionally, the company’s U.S. Building Services, U.S. Industrial Services and U.K. Building Services are performing pretty well.
For first-quarter 2021, the U.S. Construction segment delivered robust revenue performance, with a combined 5% year-over-year increase, given solid performance of its U.S. Mechanical Construction segment in commercial, healthcare and institutional markets. Operating margin also improved 110 basis points (bps) year over year.
Strategic Acquisitions
EMCOR consistently acquires assets and businesses in order to expand small private firms with proven management and expansion potential. In first-quarter 2021, the company acquired two companies — one providing mechanical services within the Southern region and the other delivering electrical construction services in the Midwestern region — for a total consideration of $24 million.
Again, EMCOR completed three acquisitions in 2020 and seven buyouts in 2019. These buyouts strengthened its overall results by adding new markets, opportunities and capabilities.
Solid Growth Prospects
EMCOR has strong prospects, as is evident from the Zacks Consensus Estimate for 2021 earnings of $6.70 per share, which has been revised upward in the past 30 days. Moreover, its earnings are expected to increase 4.7% year over year in 2021. The company has also lifted earnings projection to $6.35-$6.75 from $6.20-$6.70 per share projected earlier.
Its revenue guidance for 2021 is expected within $9.2-$9.4 billion. Its revenue guidance for 2021 is expected within $9.2-$9.4 billion, indicating a significant increase from the year-ago figure of $8.8 billion. The consensus mark for the same is pegged at $9.34 billion, signifying 6.1% year-over-year growth. These solid projections make this Zacks Rank #2 (Buy) stock a profitable pick. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How to Profit from Trillions on Spending for Infrastructure >>