Dj Emcor Group Inc, Inst Holders, 3Q 2024 (Eme)

Construction Partners, Inc. ROAD or CPI reported solid fourth-quarter fiscal 2024 (ended Sept. 30, 2024) results, with earnings and revenues surpassing the Zacks Consensus Estimate and increasing on a year-over-year basis.

Shares of the company gained 6.1% on Thursday. Owing to strong industry demand and favorable funding trends, the company raised its fiscal 2024 outlook.

Fred J. (Jule) Smith, III, CPI’s president and chief executive officer, stated, "In fiscal 2025, we continue to project growth and enhanced profitability, supported by eleven months of Lone Star's contribution in our fiscal year. The addition of Lone Star positions CPI to accelerate our ROAD-Map 2027 strategy and to deliver long-term value to our investors and other stakeholders."

Inside the CPI’s Numbers

CPI reported adjusted earnings per share (EPS) of 58 cents, which topped the Zacks Consensus Estimate of 57 cents by 1.8% but declined 1.7% year over year.

Construction Partners, Inc. Price, Consensus and EPS Surprise

Construction Partners, Inc. price-consensus-eps-surprise-chart | Construction Partners, Inc. Quote

Quarterly revenues of $538.2 million surpassed the consensus mark of $537.5 million by 0.1% and grew 13.3% year over year.

The project backlog at the end of fiscal 2024 amounted to $1.96 billion, up from the year-ago number of $1.60 billion and $1.86 billion at June 30, 2024.

Operating Highlights

The company reported gross profit of $84.1 million, up 11% from $75.5 million in the year-ago period. General and administrative expenses, as a percentage of total revenues, were 7.4%, up 50 bps from 6.9% year over year.

Adjusted EBITDA of $77 million increased 11.8% year over year. Adjusted EBITDA margin, however, declined 20 basis points to 14.3%.

CPI’s Fiscal 2024 Highlights

For the full year, CPI reported EPS of $1.31, up from 94 cents year over year. Quarterly revenues of $1.82 billion grew 16.7% year over year, led by strong operational performance throughout the Sunbelt.

Adjusted EBITDA for fiscal 2024 came in at $220.6 million, reflecting an increase of 28% from fiscal 2023. Adjusted EBITDA margin totaled 12.1%, up from 11% in fiscal 2023.

CPI’s Financials

As of Sept. 30, 2024, ROAD had cash and cash equivalents of $74.7 million, up from $48.2 million reported at the fiscal 2023-end. As of fiscal 2024-end, long-term debt (net of current maturities and deferred debt issuance costs) was $487 million, up from $360.7 million at the fiscal 2023-end.

For fiscal 2024, net cash provided by operating activities (net of acquisitions) was $209.1 million compared with $157.2 million a year ago.

Fiscal 2025 Guidance

For fiscal 2025, CPI now expects revenues in the range of $2.48-$2.58 billion, up from the prior projection of $2.42-$2.52 billion. This indicates an improvement from $1.82 billion reported in fiscal 2024.

Net income is expected to be in the range of $97-$113 million (up from the prior projection of $90-$106 million) compared with $68.9 million in fiscal 2024.

CPI now anticipates adjusted EBITDA in the range of $347-$377 million (up from the prior projection of $338-$368 million) compared with $220.6 million in fiscal 2024.

Adjusted EBITDA margin is still anticipated to be between 14% and 14.6% compared with $12.1% in fiscal 2024.

The above-mentioned guidance includes the expected results of its latest acquisition of Lone Star Paving, which is likely to be accretive from second-quarter fiscal 2025 onward.

Zacks Rank & Recent Releases

CPI currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

EMCOR Group, Inc. EME reported impressive third-quarter 2024 results, with earnings and revenues surpassing the Zacks Consensus Estimate and increasing year over year.

The upside was backed by innovation and high-demand projects, particularly in data centers, semiconductor plants, and institutional sectors. Strength across the segments helped the company achieve 12.6% higher organic revenues. The company now expects annual revenues of at least $14.5 billion compared with $14.5-$15 billion expected earlier.

MasTec, Inc. MTZ reported stellar earnings for third-quarter 2024, which handily surpassed the Zacks Consensus Estimate and increased strongly on a year-over-year basis.

However, revenues missed the analysts’ expectations and slightly declined on a year-over-year basis. MTZ posted nearly 6% lower revenues from its previously provided guidance of $3.45 billion due to near-term project delays.

Quanta Services Inc. PWR reported mixed results for the third quarter of 2024, wherein adjusted earnings beat the Zacks Consensus Estimate, but revenues missed the same.

Quanta reported a strong quarter with double-digit growth across key financial metrics, a record backlog of $34 billion and $539.5 million in free cash flow. CEO Duke Austin attributed this growth to Quanta’s diverse portfolio, high demand, effective execution and an expanding market.

Zacks Investment Research

Taking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both.

The popular research service can help you become a smarter, more self-assured investor, giving you access to daily updates of the Zacks Rank and Zacks Industry Rank, the Zacks #1 Rank List, Equity Research reports, and Premium stock screens.

Zacks Premium includes access to the Zacks Style Scores as well.

What are the Zacks Style Scores?

Developed alongside the Zacks Rank, the Zacks Style Scores are a group of complementary indicators that help investors pick stocks with the best chances of beating the market over the next 30 days.

Based on their value, growth, and momentum characteristics, each stock is assigned a rating of A, B, C, D, or F. The better the score, the better chance the stock will outperform; an A is better than a B, a B is better than a C, and so on.

The Style Scores are broken down into four categories:

Value Score

For value investors, it's all about finding good stocks at good prices, and discovering which companies are trading under their true value before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to help pick out the most attractive and discounted stocks.

Growth Score

Growth investors are more concerned with a stock's future prospects, and the overall financial health and strength of a company. Thus, the Growth Style Score analyzes characteristics like projected and historic earnings, sales, and cash flow to find stocks that will see sustainable growth over time.

Momentum Score

Momentum trading is all about taking advantage of upward or downward trends in a stock's price or earnings outlook, and these investors live by the saying "the trend is your friend." The Momentum Style Score can pinpoint good times to build a position in a stock, using factors like one-week price change and the monthly percentage change in earnings estimates.

VGM Score

What if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.

How Style Scores Work with the Zacks Rank

The Zacks Rank is a proprietary stock-rating model that harnesses the power of earnings estimate revisions, or changes to a company's earnings expectations, to help investors build a successful portfolio.

#1 (Strong Buy) stocks have produced an unmatched +25.41% average annual return since 1988, which is more than double the S&P 500's performance over the same time frame. However, the Zacks Rank examines a ton of stocks, and there can be more than 200 companies with a Strong Buy rank, and another 600 with a #2 (Buy) rank, on any given day.

This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.

That's where the Style Scores come in.

To have the best chance of big returns, you'll want to always consider stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B, which will give you the highest probability of success. If you're looking at stocks with a #3 (Hold) rank, it's important they have Scores of A or B as well to ensure as much upside potential as possible.

Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.

For instance, a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one that boasts Scores of A and B, still has a downward-trending earnings forecast, and a much greater likelihood its share price will decline as well.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: Emcor Group (EME)

EMCOR Group is one of the leading providers of mechanical and electrical construction, industrial and energy infrastructure, as well as building services for a diverse range of businesses. The company serves commercial, industrial, utility and institutional clients. The company currently operates under the following reportable segments:

EME is a #1 (Strong Buy) on the Zacks Rank, with a VGM Score of B.

Momentum investors should take note of this Construction stock. EME has a Momentum Style Score of B, and shares are up 18.1% over the past four weeks.

For fiscal 2024, one analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $1.24 to $20.74 per share. EME boasts an average earnings surprise of 32.3%.

With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, EME should be on investors' short list.

Zacks Investment Research

Have you been paying attention to shares of Emcor Group (EME)? Shares have been on the move with the stock up 18.1% over the past month. The stock hit a new 52-week high of $532.38 in the previous session. Emcor Group has gained 144.6% since the start of the year compared to the 26.3% move for the Zacks Construction sector and the 108.8% return for the Zacks Building Products - Heavy Construction industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 31, 2024, Emcor Group reported EPS of $5.8 versus consensus estimate of $4.99.

For the current fiscal year, Emcor Group is expected to post earnings of $20.74 per share on $14.67 billion in revenues. This represents a 55.47% change in EPS on a 16.58% change in revenues. For the next fiscal year, the company is expected to earn $22.24 per share on $15.64 billion in revenues. This represents a year-over-year change of 7.23% and 6.59%, respectively.

Valuation Metrics

Emcor Group may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

Emcor Group has a Value Score of D. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 25.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 23X. On a trailing cash flow basis, the stock currently trades at 32.9X versus its peer group's average of 15.3X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Emcor Group currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Emcor Group passes the test. Thus, it seems as though Emcor Group shares could have a bit more room to run in the near term.

How Does EME Stack Up to the Competition?

Shares of EME have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is MasTec, Inc. (MTZ). MTZ has a Zacks Rank of # 1 (Strong Buy) and a Value Score of C, a Growth Score of A, and a Momentum Score of C.

Earnings were strong last quarter. MasTec, Inc. beat our consensus estimate by 32.52%, and for the current fiscal year, MTZ is expected to post earnings of $5.28 per share on revenue of $12.22 billion.

Shares of MasTec, Inc. have gained 15.9% over the past month, and currently trade at a forward P/E of 39.15X and a P/CF of 15.27X.

The Building Products - Heavy Construction industry is in the top 15% of all the industries we have in our universe, so it looks like there are some nice tailwinds for EME and MTZ, even beyond their own solid fundamental situation.

Zacks Investment Research

How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.

Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.

What if you'd invested in Emcor Group (EME) ten years ago? It may not have been easy to hold on to EME for all that time, but if you did, how much would your investment be worth today?

Emcor Group's Business In-Depth

With that in mind, let's take a look at Emcor Group's main business drivers.

EMCOR Group is one of the leading providers of mechanical and electrical construction, industrial and energy infrastructure, as well as building services for a diverse range of businesses. The company serves commercial, industrial, utility and institutional clients. The company currently operates under the following reportable segments:

United States Electrical Construction and Facilities Services (contributing 22.1% to total revenues for 2023) – This comprises systems for premises electrical and lighting systems; electrical power transmission and distribution; roadway and transit lighting; fiber optic lines; voice and data communication; as well as low-voltage systems, such as fire alarm, security and process control.

United States Mechanical Construction and Facilities Services (40.3%) – This involves systems for fire protection; heating, ventilation, air conditioning, refrigeration and clean-room process ventilation; water and wastewater treatment and central plant heating and cooling; plumbing, process and high-purity piping; millwrighting; steel fabrication, erection and welding; as well as controls and filtration.

United States Building Services (24.8%) – This segment provides various types of support services related to operation and maintenance of clients’ facilities in the U.S. These include commercial and government site-based operations and maintenance; military base operations support services; infrastructure and building projects for federal, state and local governmental agencies.

United States Industrial Services (9.3%) – This segment comprises industrial maintenance and services that are needed for refineries and petrochemical plants such as designing, manufacturing, repairing and hydro blast cleaning of shell and tube heat exchangers and related equipment; overhaul and maintenance of critical process units in refineries and petrochemical plants.

United Kingdom Building Services (3.5%) – This segment provides support services related to operation and maintenance of commercial and government client facilities in the U.K.

Bottom Line

Anyone can invest, but building a successful investment portfolio requires research, patience, and a little bit of risk. So, if you had invested in Emcor Group ten years ago, you're likely feeling pretty good about your investment today.

A $1000 investment made in November 2014 would be worth $11,778.05, or a gain of 1,077.81%, as of November 22, 2024, according to our calculations. This return excludes dividends but includes price appreciation.

The S&P 500 rose 188.28% and the price of gold increased 113.76% over the same time frame in comparison.

Going forward, analysts are expecting more upside for EME.

EMCOR reported impressive third-quarter 2024 results, with earnings and revenues surpassing the Zacks Consensus Estimate by 16.2% and 0.4%, respectively. On a year-over-year basis, both top and bottom lines increased 15.3% and 60.7%, respectively. The upside was backed by innovation and high-demand projects, particularly in data centers, semiconductor plants and institutional sectors. In the quarter, RPOs approached record levels of $9.8 billion and the pipeline remained robust. The company has strengthened its capabilities across regions and sectors by investing in comprehensive employee training, greenfield expansions and strategic acquisitions. Owing to this solid performance, the company raised its financial guidance for 2024. Shares of EMCOR have outperformed the industry in the year-to-date period. Shares have gained 18.12% over the past four weeks and there have been 1 higher earnings estimate revisions for fiscal 2024 compared to none lower. The consensus estimate has moved up as well.

Zacks Investment Research