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Why You Should Add EMCOR (EME) Stock to Your Portfolio
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EMCOR Group, Inc. (EME - Free Report) is benefiting from solid contributions from the segments under United States operations and accretive acquisitions.
Recently, EMCOR reported impressive first-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate by 26.8% and 0.6%, respectively. Also, the top and the bottom lines grew year over year by 11.5% and 66.9%, respectively. The upside was attributable to improved operating performance in segments under United States operations along with strong demand for its services across several resilient non-residential market sectors.
EME has a trailing four-quarter earnings surprise of 15.7%, on average. Earnings estimates for 2023 have moved north to $9.74 per share from $9.09 per share over the past 30 days. This depicts analysts' optimism over the company’s growth prospects. Moreover, the company has a strong VGM Score of A, backed by a Value and Growth Score of B, each.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for EME’s current quarter and 2023 earnings indicates growth of 17.6% and 20.3%, respectively, from the previous year’s reported levels.
Let us delve deeper into the factors.
Factors Favoring EMCOR
EME’s operational U.S. segments have been maintaining impressive growth momentum. The company’s major segments, primarily the U.S. Mechanical and Electrical Construction segments, continued to display significant strength on significant demand for electrical mechanical systems, both in new construction and retrofit projects. Remaining Performance Obligations at first-quarter 2023-end increased 32.3% to $7.87 billion year over year. Within the U.S. Construction umbrella, the U.S. Electrical Construction and Facilities Services segment’s revenues increased 23.5% year over year to $644.7 million.
Also, in first-quarter 2023, the U.S. Building and Industrial Services segments’ revenues grew 14.1% to $725.4 million and 6.5% to $330.9 million, respectively, year over year.
EMCOR’s acquisition strategies are directed toward buying small private firms with proven management and expansion potential. During the first quarter of 2023, EME acquired two companies. One company has been clubbed into the United States Mechanical Construction and Facilities Services segment, while the other acquired entity has been integrated into the United States Building Services segment. These buyouts help in diversifying the footprint of the company, allowing it to maintain its growth momentum.
EMCOR’s trailing 12-month return on equity (ROE) is indicative of its growth potential. The company’s ROE of 22.7% compared favorably with the industry’s 7.8%, which signals more efficiency in using shareholders’ funds than peers.
Here are some other top-ranked stocks that investors may consider from the Zacks Construction sector.
Martin Marietta Materials, Inc. (MLM - Free Report) currently sports a Zacks Rank #1. MLM delivered a trailing four-quarter earnings surprise of 31%, on average. Shares of the company have gained 6.9% in the past six months.
The Zacks Consensus Estimate for MLM’s 2023 sales and EPS indicates growth of 19% and 32.1%, respectively, from the previous year’s reported levels.
Vulcan Materials Company (VMC - Free Report) currently carries a Zacks Rank #1. VMC has a trailing four-quarter earnings surprise of 7.1%, on average. Shares of the company have gained 5.2% in the past six months.
The Zacks Consensus Estimate for VMC’s 2023 sales and EPS indicates growth of 5.7% and 25.2%, respectively, from the previous year’s reported levels.
Watsco, Inc. (WSO - Free Report) currently sports a Zacks Rank #1. WSO delivered a trailing four-quarter earnings surprise of 5.3%, on average. Shares of the company have gained 14.4% in the past six months.
The Zacks Consensus Estimate for WSO’s 2023 sales and EPS indicates growth of 3.1% and 2.1%, respectively, from the previous year’s reported levels.
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Why You Should Add EMCOR (EME) Stock to Your Portfolio
EMCOR Group, Inc. (EME - Free Report) is benefiting from solid contributions from the segments under United States operations and accretive acquisitions.
Shares of EME have surged 57.4% in the past year compared with the Zacks Building Products - Heavy Construction industry’s growth of 21.1%.
Recently, EMCOR reported impressive first-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate by 26.8% and 0.6%, respectively. Also, the top and the bottom lines grew year over year by 11.5% and 66.9%, respectively. The upside was attributable to improved operating performance in segments under United States operations along with strong demand for its services across several resilient non-residential market sectors.
EME has a trailing four-quarter earnings surprise of 15.7%, on average. Earnings estimates for 2023 have moved north to $9.74 per share from $9.09 per share over the past 30 days. This depicts analysts' optimism over the company’s growth prospects. Moreover, the company has a strong VGM Score of A, backed by a Value and Growth Score of B, each.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for EME’s current quarter and 2023 earnings indicates growth of 17.6% and 20.3%, respectively, from the previous year’s reported levels.
Let us delve deeper into the factors.
Factors Favoring EMCOR
EME’s operational U.S. segments have been maintaining impressive growth momentum. The company’s major segments, primarily the U.S. Mechanical and Electrical Construction segments, continued to display significant strength on significant demand for electrical mechanical systems, both in new construction and retrofit projects. Remaining Performance Obligations at first-quarter 2023-end increased 32.3% to $7.87 billion year over year. Within the U.S. Construction umbrella, the U.S. Electrical Construction and Facilities Services segment’s revenues increased 23.5% year over year to $644.7 million.
Also, in first-quarter 2023, the U.S. Building and Industrial Services segments’ revenues grew 14.1% to $725.4 million and 6.5% to $330.9 million, respectively, year over year.
EMCOR’s acquisition strategies are directed toward buying small private firms with proven management and expansion potential. During the first quarter of 2023, EME acquired two companies. One company has been clubbed into the United States Mechanical Construction and Facilities Services segment, while the other acquired entity has been integrated into the United States Building Services segment. These buyouts help in diversifying the footprint of the company, allowing it to maintain its growth momentum.
EMCOR’s trailing 12-month return on equity (ROE) is indicative of its growth potential. The company’s ROE of 22.7% compared favorably with the industry’s 7.8%, which signals more efficiency in using shareholders’ funds than peers.
Zacks Rank & Other Key Picks
EMCOR currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Here are some other top-ranked stocks that investors may consider from the Zacks Construction sector.
Martin Marietta Materials, Inc. (MLM - Free Report) currently sports a Zacks Rank #1. MLM delivered a trailing four-quarter earnings surprise of 31%, on average. Shares of the company have gained 6.9% in the past six months.
The Zacks Consensus Estimate for MLM’s 2023 sales and EPS indicates growth of 19% and 32.1%, respectively, from the previous year’s reported levels.
Vulcan Materials Company (VMC - Free Report) currently carries a Zacks Rank #1. VMC has a trailing four-quarter earnings surprise of 7.1%, on average. Shares of the company have gained 5.2% in the past six months.
The Zacks Consensus Estimate for VMC’s 2023 sales and EPS indicates growth of 5.7% and 25.2%, respectively, from the previous year’s reported levels.
Watsco, Inc. (WSO - Free Report) currently sports a Zacks Rank #1. WSO delivered a trailing four-quarter earnings surprise of 5.3%, on average. Shares of the company have gained 14.4% in the past six months.
The Zacks Consensus Estimate for WSO’s 2023 sales and EPS indicates growth of 3.1% and 2.1%, respectively, from the previous year’s reported levels.