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EMCOR Group (EME)
NYSE:EME
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EMCOR Group
(NYSE:EME)
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Rating:79Outperform
Price Target:
$854.00
▲(14.45% Upside)
Action:ReiteratedDate:02/27/26
The score is driven primarily by strong financial performance (growth and margin expansion with conservative leverage) and a positive earnings outlook supported by record backlog and confident 2026 guidance. Technicals are constructive but somewhat stretched near-term, while a high P/E and very low dividend yield weigh on valuation.
Positive Factors
Sustained Revenue & Margin Expansion
EMCOR’s multi-year revenue doubling and meaningful margin expansion show durable scaling of its construction and facilities platform. Improved gross and net margins signal better pricing, execution and project controls across trades, supporting sustainable profitability as the company captures larger, more complex work.
Large, Diversified Backlog & Data‑Center Momentum
A record RPO provides multi‑period revenue visibility and reduces near‑term revenue risk; sizable network/data‑center RPOs give long‑cycle cash visibility. Diverse sector RPO gains (institutional, water, manufacturing) lower dependence on any single end market and support multi‑year topline stability.
Conservative Leverage and Strong Returns
Low relative leverage and high ROE preserve financial flexibility to fund growth, make targeted acquisitions, and return capital. Conservative balance sheet positioning supports investment during cyclical slowdowns and underpins the company’s ability to execute buybacks and opportunistic M&A without jeopardizing liquidity.
Negative Factors
Acquisition‑Related Amortization Pressure
Significant noncash amortization from large acquisitions reduces reported GAAP margins and EPS near term, masking operating profitability. Persistent amortization plus incremental integration costs can constrain reported earnings growth and complicate comparisons, limiting headline margin expansion despite underlying cash performance.
Working‑Capital Cash Flow Variability
EMCOR’s cash conversion is strong overall, but operating cash flow can swing with working capital and project timing. Such variability can compress near‑term liquidity, complicate funding of capex, buybacks or acquisitions, and increase sensitivity to project billing and collections during busy build cycles.
Execution & Booking Sensitivity to Guidance
Guidance hinges on a substantial share of new bookings and disciplined margin execution. That exposes results to timing of awards, competitive bidding, and project start‑up effects; combined with sector timing risk and a small UK divestiture headwind, execution shortfalls could materially affect near‑term revenue and margin delivery.
EMCOR Group (EME) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$36.12B
Dividend Yield0.16%
Average Volume (3M)327.71K
Price to Earnings (P/E)32.4
Beta (1Y)1.58
Revenue Growth14.11%
EPS Growth26.26%
CountryUS
Employees40,400
SectorIndustrials
Sector Strength72
IndustryEngineering & Construction
Share Statistics
EPS (TTM)7.19
Shares Outstanding44,765,865
10 Day Avg. Volume342,920
30 Day Avg. Volume327,714
Financial Highlights & Ratios
PEG Ratio0.71
Price to Book (P/B)7.50
Price to Sales (P/S)1.62
P/FCF Ratio23.17
Enterprise Value/Market Cap0.99
Enterprise Value/Revenue2.10
Enterprise Value/Gross Profit10.72
Enterprise Value/Ebitda19.34
Forecast
1Y Price Target
$781.00Price Target Upside4.67% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
EPS Forecast (FY)27.93
Revenue Forecast (FY)$17.82B
EMCOR Group Business Overview & Revenue Model
Company DescriptionEMCOR Group, Inc. provides electrical and mechanical construction, and facilities services primarily in the United States and the United Kingdom. It offers design, integration, installation, starts-up, operation, and maintenance services related to electrical power transmission, distribution, and generation systems; energy solutions; premises electrical and lighting systems; process instrumentation in the refining, chemical processing, and food processing industries; low-voltage systems, such as fire alarm, security, and process control systems; voice and data communications systems; roadway and transit lighting, signaling, and fiber optic lines; heating, ventilation, air conditioning, refrigeration, and geothermal solutions; clean-room process ventilation systems; fire protection and suppression systems; plumbing, process, and high-purity piping systems; controls and filtration systems; water and wastewater treatment systems; central plant heating and cooling systems; crane and rigging services; millwright services; and steel fabrication, erection, and welding services. The company also provides building services that cover commercial and government site-based operations and maintenance; facility management, maintenance, and services; outage services to utilities and industrial plants; military base operations support services; mobile mechanical maintenance and services; services for indoor air quality; floor care and janitorial services; landscaping, lot sweeping, and snow removal services; vendor management and call center services; installation and support for building systems; program development, management, and maintenance for energy systems; technical consulting and diagnostic services; infrastructure and building projects; small modification and retrofit projects; and other building services. It offers industrial services to oil, gas, and petrochemical industries. EMCOR Group, Inc. was incorporated in 1987 and is headquartered in Norwalk, Connecticut.
How the Company Makes MoneyEMCOR Group generates revenue primarily through its construction and facilities services. The company makes money by executing contracts for mechanical and electrical construction projects, which often involve significant upfront costs but yield substantial returns upon completion. Key revenue streams include service agreements, installation contracts, and ongoing maintenance services for HVAC systems, plumbing, and electrical installations. Additionally, EMCOR benefits from long-term contracts that provide stable, recurring revenue through facilities management services. Strategic partnerships with suppliers and subcontractors enhance its service offerings and competitive positioning, while its reputation for reliability and quality helps in securing repeat business and new contracts.
EMCOR Group Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 23, 2026
Earnings Call Sentiment Positive
The call presented a strongly positive operating and financial picture with record 2025 revenues, margins, EPS and cash generation, substantial backlog growth (RPOs), successful large-scale M&A (Miller) and sizable returns to shareholders. Operational challenges were acknowledged — including some margin compression from new-territory project start-ups, increased SG&A and noncash amortization from acquisitions, and a near-term revenue headwind from the U.K. divestiture. Management emphasized diversified demand, multi-year data center visibility, disciplined capital allocation and confidence in sustaining productivity gains. Overall, the positives (record results, strong backlog, cash generation, and strategic positioning) materially outweigh the limited execution and accounting headwinds cited.Q4-2025 Updates
Positive Updates
Quarterly Revenue and Earnings Growth
Q4 revenues of $4.5 billion, up 19.7% year-over-year; adjusted diluted EPS of $7.19, up 13.8% YoY; adjusted operating income of $440 million, up 13.1% YoY; adjusted operating margin for the quarter of 9.7%.
Record Full-Year Financial Performance
Full year 2025 record revenues of $16.99 billion, record adjusted full-year operating margin of 9.4%, and record adjusted diluted EPS of $25.87 (up 20% vs. 2024); operating cash flow of $1.3 billion and cash conversion in excess of 80%.
Strong Construction Segment Results
Full-year mechanical and electrical construction operating margins of 12.8% and 12.1%, respectively; those segments grew revenues by 10.1% (mechanical) and 51.8% (electrical) as reported by management.
Robust RPO Backlog and Data Center Momentum
Reported funded backlog (RPOs) increased to $13.254 billion from $10.1 billion; RPOs up ~17.6% organically YoY (management commentary); network & communications RPOs hit a record $4.46 billion, up roughly $1.65 billion (~60% YoY), with multi-year visibility for data center capex.
Diverse End-Market Strength
Notable RPO increases by sector: Institutional up ~40% to $1.55B; Manufacturing & Industrial up ~23% to $1.1B; Water & Wastewater up nearly 60% (+$408.5M) to ~$1.1B; hospitality & entertainment RPOs more than doubled YoY—demonstrating diversification beyond data centers.
Strategic M&A and Integration
Completed largest acquisition in company history (Miller Electric) and 9 other companies; management reports Miller integration on track and acquisitions are platform-enhancing—supporting growth in Southeast and Texas.
Shareholder Returns and Capital Allocation
Repurchased roughly $580M of shares in the year (Q4 repurchases ~$155M) and repurchased almost $600M (management comment); increased quarterly dividend by 60% to $0.40; balance sheet liquidity of ~$1.1B cash on hand supports balanced capital allocation.
Safety, Recognition and Operational Capabilities
Maintained industry-leading safety with TRIR under 1 for second year; inclusion in the S&P 500; Fortune recognition (#1 most admired in engineering & construction); highlighted strengths in VDC/prefab, national execution, and ability to mobilize union labor across markets.
Negative Updates
Margin Compression and Project Mix Pressures
Management noted spillover headwinds from prior quarter (Q3) into Q4 and that electrical margins 'coughed up 50–60 basis points' in 2025 due to new-territory start-ups, mix shift toward target-price/GMP work and project start-up effects—creating margin volatility.
SG&A and Amortization Increases
SG&A of $462.3M (10.2% of revenues) included $10.7M of transaction expenses, $35.2M incremental expenses from acquired companies and $6.2M additional amortization; excluding those items, SG&A still grew ~$41.8M mainly from higher employment and incentive costs.
Noncash Amortization Drag from Acquisitions
Incremental intangible amortization materially affected reported results: Miller amortization ~ $40.5M in 2025 (declining to ~$33M in 2026); Danforth adds ~$2.7M in 2025 and ~ $14.2M in 2026 (incremental ~ $11.5M), which pressures GAAP margins despite being noncash.
Divestiture Headwind from U.K. Sale
Sale of EMCOR U.K. removed revenue (~$95.3M in Q4 for two months) and creates an approximate ~3% revenue headwind to year-over-year growth comparisons; transaction costs and gain on sale required adjustments to adjusted results.
Sector-Specific Slowdowns
High-tech manufacturing showed a decline in the quarter due to completion of certain semiconductor projects; management expects variability tied to timing of large project awards and funded phases.
Guidance Sensitivity and Execution Requirements
2026 guidance (revenues $17.75B–$18.5B; diluted EPS $27.25–$29.25; full-year operating margin 9.0%–9.4%) requires booking ~40%–45% of new work to reach the midpoint/high end—highlighting execution and booking risk; certain end-market mix (e.g., water/wastewater) could depress margins.
Company Guidance
EMCOR guided 2026 revenues of $17.75–$18.50 billion, diluted EPS of $27.25–$29.25 and a full‑year operating margin of 9.0%–9.4%, noting high confidence in the low‑to‑midpoint absent a major economic event but that reaching the midpoint‑to‑high end requires strong margin execution and booking roughly 40%–45% of new work; that guidance rests on a starting RPO backlog of about $13.25 billion (up from $10.1B) with ~82% expected to burn in the next 12 months. Management framed the outlook against 2025 record results — $16.99B revenue, adjusted diluted EPS $25.87 ($28.19 GAAP), record adjusted operating margin 9.4% and $1.3B operating cash flow — and highlighted balance sheet strength (≈$1.1B cash), ~ $580M of share repurchases in 2025 and an incremental $500M repurchase authorization.EMCOR Group Financial Statement Overview
Summary
Strong multi-year revenue growth and meaningful margin expansion (gross margin ~15.9% to ~19.6%; net margin ~1.5% to ~7.5%) support a high score. Balance sheet leverage remains conservative (debt-to-equity ~0.23) with very strong ROE (~0.35), but the 2025 debt increase and working-capital-driven cash flow variability temper the score.Income Statement
Revenue has compounded strongly from 2020–2025 (from ~$8.8B to ~$17.0B), with growth re-accelerating in 2025. Profitability has improved meaningfully over the period: gross margin rose from ~15.9% (2020) to ~19.6% (2025) and net margin expanded from ~1.5% to ~7.5%, signaling better project execution and pricing/discipline. The main watch-out is that margins can be cyclical in engineering & construction, and the 2025 step-up follows several years of expansion, making incremental gains harder from here.90
Very Positive
Balance Sheet
Leverage remains conservative, with debt low relative to equity (debt-to-equity ~0.23 in 2025), supporting financial flexibility. Returns to shareholders are very strong (return on equity ~0.35 in both 2024 and 2025), consistent with improved profitability and efficient capital use. The key weakness is a noticeable increase in debt in 2025 versus 2024 (to ~$851M from ~$349M), which bears monitoring even though overall leverage still looks manageable.82
Very Positive
Cash Flow
Cash generation is solid, with free cash flow of ~$1.19B in 2025 and conversion of earnings into free cash flow remaining high (free cash flow running at ~91% of net income in 2025, similar to prior years). However, operating cash flow declined in 2025 versus 2024 despite higher earnings, and operating cash flow relative to revenue remains modest, suggesting working-capital swings can meaningfully impact cash in this business.78
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 16.99B | 14.57B | 12.58B | 11.08B | 9.90B |
| Gross Profit | 3.33B | 2.77B | 2.09B | 1.60B | 1.50B |
| EBITDA | 1.84B | 1.51B | 1.01B | 680.56M | 647.81M |
| Net Income | 1.27B | 1.01B | 632.99M | 406.12M | 383.53M |
Balance Sheet | |||||
| Total Assets | 9.29B | 7.72B | 6.61B | 5.52B | 5.44B |
| Cash, Cash Equivalents and Short-Term Investments | 1.11B | 1.34B | 789.75M | 456.44M | 821.35M |
| Total Debt | 850.69M | 348.92M | 345.27M | 535.17M | 540.34M |
| Total Liabilities | 5.62B | 4.78B | 4.14B | 3.55B | 3.19B |
| Stockholders Equity | 3.67B | 2.94B | 2.47B | 1.97B | 2.25B |
Cash Flow | |||||
| Free Cash Flow | 1.19B | 1.33B | 821.25M | 448.64M | 282.63M |
| Operating Cash Flow | 1.30B | 1.41B | 899.65M | 497.93M | 318.82M |
| Investing Cash Flow | -873.59M | -299.28M | -161.29M | -140.80M | -153.08M |
| Financing Cash Flow | -663.76M | -555.37M | -412.05M | -710.12M | -245.46M |
EMCOR Group Technical Analysis
Positive
746.18
Price Trends
698.13
Positive
676.26
Positive
619.05
Positive
Market Momentum
31.80
Positive
63.85
Neutral
50.15
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EME, the sentiment is Positive. The current price of 746.18 is below the 20-day moving average (MA) of 770.25, above the 50-day MA of 698.13, and above the 200-day MA of 619.05, indicating a bullish trend. The MACD of 31.80 indicates Positive momentum. The RSI at 63.85 is Neutral, neither overbought nor oversold. The STOCH value of 50.15 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for EME.
EMCOR Group Risk Analysis
EMCOR Group disclosed 34 risk factors in its most recent earnings report. EMCOR Group reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
EMCOR Group Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $51.66B | 50.86 | 49.24% | 0.20% | 27.71% | 80.54% | |
79 Outperform | $36.12B | 32.45 | 37.10% | 0.16% | 14.11% | 26.26% | |
76 Outperform | $85.02B | 83.59 | 12.65% | 0.09% | 18.72% | 23.97% | |
71 Outperform | $19.58B | -59.37 | 9.50% | ― | 10.69% | ― | |
69 Neutral | $12.33B | 21.88 | 27.11% | 1.06% | 0.21% | 53.80% | |
66 Neutral | $15.80B | 36.92 | 12.01% | 0.94% | -23.00% | -61.88% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
* Industrials Sector Average
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85.67%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.