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EMCOR (EME) Benefits From Buyout Strategy & Strong Liquidity
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Shares of EMCOR Group, Inc. (EME - Free Report) jumped recently by 19.5% compared with the Zacks Building Products - Heavy Construction industry’s 13.4% growth. The company has been banking on solid acquisition strategies, strength in the U.S. Mechanical and Electrical Construction segments and impressive liquidity management.
On Aug 5, EME acquired a leading full-service electrical construction contractor, Gaston Electrical Co., LLC (formerly Gaston Electric Co., Inc.). Gaston — headquartered in Norwood, MA — designs, installs, constructs and maintains electrical and low-voltage systems in a wide variety of projects. These projects include hospitals, laboratories and life sciences facilities as well as data centers, universities, sports arenas, and large-scale residential and commercial office buildings.
The buyout will strengthen EMCOR’s specialty construction services operations in the Greater Boston area, with expected revenues of $140 million and remaining unsatisfied performance obligations of $120 million in 2022.
Image Source: Zacks Investment Research
Pertaining to the buyout, Dan Fitzgibbons, the President and CEO of EME’s Electrical Construction Services Segment, stated, “This group brings important capability and expertise in servicing many of EMCOR’s core end markets, including life sciences facilities and data centers. With one of the most experienced executive and field management teams in the electrical construction industry, Gaston will further broaden and enhance the service offerings EMCOR provides to its customers in the Greater Boston area.”
During the first half of 2022, it acquired two companies that provide fire protection services in the Northeastern and Southern regions of the United States, respectively. Also, it acquired a company specializing in building automation and controls in the Southwestern region within the U. S. Building Services segment.
Additionally, this leading mechanical and electrical construction, industrial and energy infrastructure and building services provider is enjoying strong project growth since 2021. Total Remaining Performance Obligations or RPOs increased 22% in 2021 and 24.5% at March end. The RPOs at June end were $6.46 billion, up 26.5% from the prior year. EMCOR continues to see demand for electrical mechanical systems, both in new construction and retrofit projects.
Yet, the industry is witnessing higher costs, labor woes and supply constraints. Also, its connection with the highly volatile oil and gas industry concerns EMCOR and other industry players like Dycom Industries, Inc. (DY - Free Report) , MasTec, Inc. (MTZ - Free Report) and Primoris Services Corporation (PRIM - Free Report) .
However, this Zacks Rank #2 (Buy) company is poised to regain on a strong liquidity position and growth prospect. As of Jun 30, it had cash and cash equivalents of $262.4 million. EMCOR ended the second quarter with a long-term debt and finance lease of $245 million, marking a decline from the 2021-end level of $245.5 million. Although its cash and cash equivalents reduced over time, it is enough to meet the current debt of $15.6 million. Moreover, it has no significant debt maturity till March 2025.
EME’s bottom line topped the Zacks Consensus Estimate in 19 of the trailing 21 quarters. Earnings estimates for 2022 suggest 9.5% year-over-year growth. The company currently has a VGM Score of B, supported by both the Value and Growth Score of B.
A Brief Overview of Above-Mentioned Stocks
Dycom is benefiting from the higher demand for network bandwidth and mobile broadband, extended geography, proficient program management and network planning services. The persistent impacts of a large customer program complexity, lower year-over-year revenues related to other large customers and higher fuel costs are a concern. The prospects of the Telecommunication business look good, given increased customers’ need to expand capacity and improve the performance of existing networks and, in certain instances, deploy new networks. Dycom expects considerable opportunities across a broad array of customers.
MasTec — a Zacks Rank #3 company — is a leading infrastructure construction company operating mainly throughout North America. MasTec has been benefiting from solid performance across the non-Oil and Gas business, strong backlog, and recent acquisitions. It is one of the largest clean energy contractors in the country. Its expertise in constructing wind farms, solar farms, biomass facilities, high-voltage transmission lines, substations, battery storage and hydrogen-enabled solutions uniquely position the company to grow further in this pro-clean energy Biden’s administration.
Estimates for MTZ’s 2022 earnings are expected to fall 40.1% year over year.
Primoris — a Zacks Rank #2 company — is a specialty contractor company operating in the United States and Canada. A robust backlog level of more than $4 billion and solid contract awards in the Energy/Renewables and Utilities segments depict incredible momentum in the future despite the supply chain and permitting challenges. Utility-scale solar projects continued to drive the progress of the Energy/Renewables segment.
Primoris’ earnings for 2022 are expected to grow 18.4%.
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EMCOR (EME) Benefits From Buyout Strategy & Strong Liquidity
Shares of EMCOR Group, Inc. (EME - Free Report) jumped recently by 19.5% compared with the Zacks Building Products - Heavy Construction industry’s 13.4% growth. The company has been banking on solid acquisition strategies, strength in the U.S. Mechanical and Electrical Construction segments and impressive liquidity management.
On Aug 5, EME acquired a leading full-service electrical construction contractor, Gaston Electrical Co., LLC (formerly Gaston Electric Co., Inc.). Gaston — headquartered in Norwood, MA — designs, installs, constructs and maintains electrical and low-voltage systems in a wide variety of projects. These projects include hospitals, laboratories and life sciences facilities as well as data centers, universities, sports arenas, and large-scale residential and commercial office buildings.
The buyout will strengthen EMCOR’s specialty construction services operations in the Greater Boston area, with expected revenues of $140 million and remaining unsatisfied performance obligations of $120 million in 2022.
Image Source: Zacks Investment Research
Pertaining to the buyout, Dan Fitzgibbons, the President and CEO of EME’s Electrical Construction Services Segment, stated, “This group brings important capability and expertise in servicing many of EMCOR’s core end markets, including life sciences facilities and data centers. With one of the most experienced executive and field management teams in the electrical construction industry, Gaston will further broaden and enhance the service offerings EMCOR provides to its customers in the Greater Boston area.”
During the first half of 2022, it acquired two companies that provide fire protection services in the Northeastern and Southern regions of the United States, respectively. Also, it acquired a company specializing in building automation and controls in the Southwestern region within the U. S. Building Services segment.
Additionally, this leading mechanical and electrical construction, industrial and energy infrastructure and building services provider is enjoying strong project growth since 2021. Total Remaining Performance Obligations or RPOs increased 22% in 2021 and 24.5% at March end. The RPOs at June end were $6.46 billion, up 26.5% from the prior year. EMCOR continues to see demand for electrical mechanical systems, both in new construction and retrofit projects.
Yet, the industry is witnessing higher costs, labor woes and supply constraints. Also, its connection with the highly volatile oil and gas industry concerns EMCOR and other industry players like Dycom Industries, Inc. (DY - Free Report) , MasTec, Inc. (MTZ - Free Report) and Primoris Services Corporation (PRIM - Free Report) .
However, this Zacks Rank #2 (Buy) company is poised to regain on a strong liquidity position and growth prospect. As of Jun 30, it had cash and cash equivalents of $262.4 million. EMCOR ended the second quarter with a long-term debt and finance lease of $245 million, marking a decline from the 2021-end level of $245.5 million. Although its cash and cash equivalents reduced over time, it is enough to meet the current debt of $15.6 million. Moreover, it has no significant debt maturity till March 2025.
EME’s bottom line topped the Zacks Consensus Estimate in 19 of the trailing 21 quarters. Earnings estimates for 2022 suggest 9.5% year-over-year growth. The company currently has a VGM Score of B, supported by both the Value and Growth Score of B.
A Brief Overview of Above-Mentioned Stocks
Dycom is benefiting from the higher demand for network bandwidth and mobile broadband, extended geography, proficient program management and network planning services. The persistent impacts of a large customer program complexity, lower year-over-year revenues related to other large customers and higher fuel costs are a concern. The prospects of the Telecommunication business look good, given increased customers’ need to expand capacity and improve the performance of existing networks and, in certain instances, deploy new networks. Dycom expects considerable opportunities across a broad array of customers.
Dycom’s, currently carrying a Zacks Rank #3 (Hold), earnings for fiscal 2023 are expected to grow 115.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
MasTec — a Zacks Rank #3 company — is a leading infrastructure construction company operating mainly throughout North America. MasTec has been benefiting from solid performance across the non-Oil and Gas business, strong backlog, and recent acquisitions. It is one of the largest clean energy contractors in the country. Its expertise in constructing wind farms, solar farms, biomass facilities, high-voltage transmission lines, substations, battery storage and hydrogen-enabled solutions uniquely position the company to grow further in this pro-clean energy Biden’s administration.
Estimates for MTZ’s 2022 earnings are expected to fall 40.1% year over year.
Primoris — a Zacks Rank #2 company — is a specialty contractor company operating in the United States and Canada. A robust backlog level of more than $4 billion and solid contract awards in the Energy/Renewables and Utilities segments depict incredible momentum in the future despite the supply chain and permitting challenges. Utility-scale solar projects continued to drive the progress of the Energy/Renewables segment.
Primoris’ earnings for 2022 are expected to grow 18.4%.