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Can Comfort Systems Keep Its Gross Margin Above 24% for Long?
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Key Takeaways
Comfort Systems expanded its gross margin by 340 bps to 23.6% in the first nine months of 2025.
The backlog surged 65% year over year to $9.38B, led by technology and advanced manufacturing work.
FIX benefits from selective bidding, labor discipline and a higher-margin project mix entering 2026.
Comfort Systems USA (FIX - Free Report) has been witnessing gross margin growth since the start of 2025. For the first nine months of 2025, its gross margin expanded year over year by 340 basis points (bps) to 23.6%, with the metric increasing 370 bps in the third quarter. The sustained improvement has been driven by a favorable project mix, execution discipline and strong end-market demand.
The primary driver of the company’s margin expansion is its growing exposure to technology and advanced manufacturing projects, which account for the majority of its backlog. As of the third quarter of 2025, FIX’s backlog of $9.38 billion grew year over year by 65% from $5.68 billion and 15.5% sequentially. Year-to-date, the Technology sector accounted for about 42% of revenues, up from 32% reported last year, as hyperscale and AI-driven infrastructure projects continue to scale in size and urgency. These projects tend to be larger, more complex and less price-sensitive, allowing Comfort Systems to bid selectively and protect pricing. Management has repeatedly emphasized disciplined bidding and walking away from low-return work, which has supported higher gross profit per dollar of revenue.
Despite labor constraints across the construction industry, FIX has benefited from its decentralized model and experienced local operators, enabling better labor deployment and tighter cost controls.
Comfort Systems enters 2026 with strong visibility, robust cash generation and a backlog skewed toward higher-margin verticals. While holding above 24% indefinitely may be challenging, the company appears well-positioned to keep gross margin structurally higher than its pre-2024 levels, suggesting that the recent margin gains are more structural than cyclical.
Comfort Systems vs. Other Market Players
Comfort Systems has accelerated growth through targeted add-on acquisitions and a rapidly expanding backlog, winning work across data centers, industrial HVAC and large commercial projects. But the firm does face substantial competition from key market players, including Carrier Global Corp. (CARR - Free Report) and AECOM (ACM - Free Report) .
Carrier Global is reshaping its portfolio through strategic mergers and acquisitions, alongside divestitures, adding climate and intelligent-energy assets while exiting non-core businesses. These moves reflect efforts to stitch together products, controls and services at scale to build electrification and efficiency plays. On the other hand, AECOM competes from a different vantage. Its global engineering and design platform, massive project pipeline and heavy-civil capabilities make it the go-to for the largest, technically complex infrastructure and energy projects that require end-to-end delivery and engineering depth.
Nonetheless, Comfort Systems’ competitive advantage today is pragmatic and focused, as its focus on pairing M&A with deep HVAC/electrical execution enables it to win bundled, time-sensitive builds faster than broader engineering houses compared with AECOM and Carrier Global.
FIX Stock’s Price Performance & Valuation Trend
Shares of this Texas-based heating, ventilation, air conditioning and electrical contracting service provider have surged 81.5% in the past six months, notably outperforming the Zacks Building Products - Air Conditioner and Heating industry, the broader Construction sector and the S&P 500 Index.
Image Source: Zacks Investment Research
FIX stock is currently trading at a premium compared with the industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 30.93, as evidenced by the chart below.
Image Source: Zacks Investment Research
Earnings Estimate Trend of FIX
FIX’s earnings estimates for 2025 and 2026 have remained stable over the past 60 days at $26.31 and $30.61 per share, respectively. However, the estimated figures for 2025 and 2026 imply year-over-year growth of 80.2% and 16.4%, respectively.
Image: Bigstock
Can Comfort Systems Keep Its Gross Margin Above 24% for Long?
Key Takeaways
Comfort Systems USA (FIX - Free Report) has been witnessing gross margin growth since the start of 2025. For the first nine months of 2025, its gross margin expanded year over year by 340 basis points (bps) to 23.6%, with the metric increasing 370 bps in the third quarter. The sustained improvement has been driven by a favorable project mix, execution discipline and strong end-market demand.
The primary driver of the company’s margin expansion is its growing exposure to technology and advanced manufacturing projects, which account for the majority of its backlog. As of the third quarter of 2025, FIX’s backlog of $9.38 billion grew year over year by 65% from $5.68 billion and 15.5% sequentially. Year-to-date, the Technology sector accounted for about 42% of revenues, up from 32% reported last year, as hyperscale and AI-driven infrastructure projects continue to scale in size and urgency. These projects tend to be larger, more complex and less price-sensitive, allowing Comfort Systems to bid selectively and protect pricing. Management has repeatedly emphasized disciplined bidding and walking away from low-return work, which has supported higher gross profit per dollar of revenue.
Despite labor constraints across the construction industry, FIX has benefited from its decentralized model and experienced local operators, enabling better labor deployment and tighter cost controls.
Comfort Systems enters 2026 with strong visibility, robust cash generation and a backlog skewed toward higher-margin verticals. While holding above 24% indefinitely may be challenging, the company appears well-positioned to keep gross margin structurally higher than its pre-2024 levels, suggesting that the recent margin gains are more structural than cyclical.
Comfort Systems vs. Other Market Players
Comfort Systems has accelerated growth through targeted add-on acquisitions and a rapidly expanding backlog, winning work across data centers, industrial HVAC and large commercial projects. But the firm does face substantial competition from key market players, including Carrier Global Corp. (CARR - Free Report) and AECOM (ACM - Free Report) .
Carrier Global is reshaping its portfolio through strategic mergers and acquisitions, alongside divestitures, adding climate and intelligent-energy assets while exiting non-core businesses. These moves reflect efforts to stitch together products, controls and services at scale to build electrification and efficiency plays. On the other hand, AECOM competes from a different vantage. Its global engineering and design platform, massive project pipeline and heavy-civil capabilities make it the go-to for the largest, technically complex infrastructure and energy projects that require end-to-end delivery and engineering depth.
Nonetheless, Comfort Systems’ competitive advantage today is pragmatic and focused, as its focus on pairing M&A with deep HVAC/electrical execution enables it to win bundled, time-sensitive builds faster than broader engineering houses compared with AECOM and Carrier Global.
FIX Stock’s Price Performance & Valuation Trend
Shares of this Texas-based heating, ventilation, air conditioning and electrical contracting service provider have surged 81.5% in the past six months, notably outperforming the Zacks Building Products - Air Conditioner and Heating industry, the broader Construction sector and the S&P 500 Index.
Image Source: Zacks Investment Research
FIX stock is currently trading at a premium compared with the industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 30.93, as evidenced by the chart below.
Image Source: Zacks Investment Research
Earnings Estimate Trend of FIX
FIX’s earnings estimates for 2025 and 2026 have remained stable over the past 60 days at $26.31 and $30.61 per share, respectively. However, the estimated figures for 2025 and 2026 imply year-over-year growth of 80.2% and 16.4%, respectively.
Image Source: Zacks Investment Research
Comfort Systems stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.