Orion Wins $111M Contracts, Strengthens Concrete & Marine Units

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 research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.

It also includes access to the Zacks Style Scores.

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.

Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.

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, on the other hand, are more concerned with a company's financial strength and health, and its future outlook. The Growth Style Score examines things like projected and historic earnings, sales, and cash flow to find stocks that will experience 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

If you like to use all three kinds of investing, then the VGM Score is for you. It's a combination of all Style Scores, and is an important indicator to use with the Zacks Rank. The VGM Score rates each stock on their shared weighted styles, narrowing 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, which is a proprietary stock-rating model, employs earnings estimate revisions, or changes to a company's earnings expectations, to make building a winning portfolio easier.

Investors can count on the Zacks Rank's success, with #1 (Strong Buy) stocks producing an unmatched +25.41% average annual return since 1988, more than double the S&P 500's performance. But the model rates a large number of stocks, and there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.

With more than 800 top-rated stocks to choose from, it can certainly feel overwhelming to pick the ones that are right for you and your investing journey.

That's where the Style Scores come in.

To maximize your returns, you want to buy stocks with the highest probability of success. This means picking stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you find yourself looking at stocks with a #3 (Hold) rank, make sure they have Scores of A or B as well to ensure as much upside potential as possible.

As mentioned above, the Scores are designed to work with the Zacks Rank, so any change to a company's earnings outlook should be a deciding factor when picking which stocks to buy.

A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.

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

Stock to Watch: MasTec (MTZ)

MasTec, Inc. is a leading infrastructure construction company operating mainly throughout North America. The company engages in the engineering, building, installation, maintenance and upgrade of energy, communication, utility and other infrastructure.

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

Additionally, the company could be a top pick for growth investors. MTZ has a Growth Style Score of A, forecasting year-over-year earnings growth of 84.3% for the current fiscal year.

For fiscal 2024, four analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.61 to $3.63 per share. MTZ boasts an average earnings surprise of 40.2%.

With a solid Zacks Rank and top-tier Growth and VGM Style Scores, MTZ 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