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Here's Why You Should Add EMCOR (EMR) to Your Portfolio
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Leading mechanical and electrical services provider, EMCOR Group, Inc. (EME - Free Report) had a solid start to 2017, setting new records for revenues and net income. Late in April, the company came up with its first-quarter 2017 results, wherein adjusted earnings per share from continuing operations of 88 cents trumped the Zacks Consensus Estimate by 29.4%.
An outstanding performance in the construction segment, building services and industrial services set the tone for strong future growth, which is reflected in the company’s healthy backlog and 2017 guidance. Encouragingly, EMCOR enjoyed a strong bull run on the bourse, having generated a return of 33.7%, which is almost five times the Zacks categorized Building-Heavy Construction industry’s average gain of 6.6%.
Read on to find out the key factors which make this Zacks Rank #2 (Buy) company an attractive proposition for investors right now.
Factors to Buy
Revenue Strength: EMCOR’s revenues have observed a compounded annual growth rate (“CAGR”) of 6.1% from 2011 to 2016. Over the past few years, increased project activity within the commercial and transportation market sector has been driving growth of the U.S. Electrical Construction segment.
Growth of U.S. Mechanical Construction segment has been driven by sturdy performance and strong execution in commercial, manufacturing, healthcare and transportation markets. Also, EMCOR reiterated revenue guidance for 2017 between $7.5 billion and $7.6 billion.
Impressive VGM Score: The company has a VGM score of ‘B’. The score identifies stocks that have the most attractive value, growth and momentum characteristics, and a good score indicates stronger chances of success. Our research shows that stocks with Style Scores of ‘A’ or ‘B,’ when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Positive Analyst Sentiment: Analysts have become increasingly bullish on the company over the last month, as the Zacks Consensus Estimate for full-year 2017 earnings trended up over the same time frame from $3.39 to $3.46, supported by two upward estimate revisions versus zero downward.
In fact, encouraged by its solid top-line performance, accretive acquisitions and increasing traction in the U.S. construction space, EMCOR’s management raised its 2017 guidance, with earnings from continuing operations projected in the range of $3.20–$3.50, up from previous projections of $3.10–$3.50.
Robust Inorganic Prospects: EMCOR’s keen eye for strategic acquisitions has strongly boosted the company’s inorganic growth. Its acquisition strategies are directed toward buying small private firms with proven management and expansion potential. Over time, these buyouts have fortified EMCOR’s market-leading position in electrical construction and services, and expanded its capabilities in the energy and industrial sectors.
During first-quarter 2017, the company acquired two firms — one in fire protection and one in mechanical services. Both acquisitions will add unique capabilities to the company’s portfolio and broaden its geographic footprint. For first-quarter 2017, acquisitions contributed about $77.7 million of total revenues.
TopBuild has a positive average earnings surprise of 6.0% for the last four quarters, having beaten estimates three times.
Lennar has a stellar earnings surprise history with an average positive surprise of 8.7%, beating estimates all through.
Weyerhaeuser has an average positive surprise of 1.3%, beating estimates twice for as many misses over the trailing four quarters.
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Here's Why You Should Add EMCOR (EMR) to Your Portfolio
Leading mechanical and electrical services provider, EMCOR Group, Inc. (EME - Free Report) had a solid start to 2017, setting new records for revenues and net income. Late in April, the company came up with its first-quarter 2017 results, wherein adjusted earnings per share from continuing operations of 88 cents trumped the Zacks Consensus Estimate by 29.4%.
An outstanding performance in the construction segment, building services and industrial services set the tone for strong future growth, which is reflected in the company’s healthy backlog and 2017 guidance. Encouragingly, EMCOR enjoyed a strong bull run on the bourse, having generated a return of 33.7%, which is almost five times the Zacks categorized Building-Heavy Construction industry’s average gain of 6.6%.
Read on to find out the key factors which make this Zacks Rank #2 (Buy) company an attractive proposition for investors right now.
Factors to Buy
Revenue Strength: EMCOR’s revenues have observed a compounded annual growth rate (“CAGR”) of 6.1% from 2011 to 2016. Over the past few years, increased project activity within the commercial and transportation market sector has been driving growth of the U.S. Electrical Construction segment.
Growth of U.S. Mechanical Construction segment has been driven by sturdy performance and strong execution in commercial, manufacturing, healthcare and transportation markets. Also, EMCOR reiterated revenue guidance for 2017 between $7.5 billion and $7.6 billion.
Impressive VGM Score: The company has a VGM score of ‘B’. The score identifies stocks that have the most attractive value, growth and momentum characteristics, and a good score indicates stronger chances of success. Our research shows that stocks with Style Scores of ‘A’ or ‘B,’ when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Positive Analyst Sentiment: Analysts have become increasingly bullish on the company over the last month, as the Zacks Consensus Estimate for full-year 2017 earnings trended up over the same time frame from $3.39 to $3.46, supported by two upward estimate revisions versus zero downward.
In fact, encouraged by its solid top-line performance, accretive acquisitions and increasing traction in the U.S. construction space, EMCOR’s management raised its 2017 guidance, with earnings from continuing operations projected in the range of $3.20–$3.50, up from previous projections of $3.10–$3.50.
Robust Inorganic Prospects: EMCOR’s keen eye for strategic acquisitions has strongly boosted the company’s inorganic growth. Its acquisition strategies are directed toward buying small private firms with proven management and expansion potential. Over time, these buyouts have fortified EMCOR’s market-leading position in electrical construction and services, and expanded its capabilities in the energy and industrial sectors.
During first-quarter 2017, the company acquired two firms — one in fire protection and one in mechanical services. Both acquisitions will add unique capabilities to the company’s portfolio and broaden its geographic footprint. For first-quarter 2017, acquisitions contributed about $77.7 million of total revenues.
Other Stocks to Consider
Other top-ranked stocks in the industry include TopBuild Corp. (BLD - Free Report) , Lennar Corp. (LEN - Free Report) and Weyerhaeuser Co. (WY - Free Report) . While TopBuild sports a Zacks Rank #1 (Strong Buy), Lennar and Weyerhaeuser carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
TopBuild has a positive average earnings surprise of 6.0% for the last four quarters, having beaten estimates three times.
Lennar has a stellar earnings surprise history with an average positive surprise of 8.7%, beating estimates all through.
Weyerhaeuser has an average positive surprise of 1.3%, beating estimates twice for as many misses over the trailing four quarters.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>