EMCOR Group, Inc. (NYSE: EME)

Sector: Industrials Industry: Engineering & Construction CIK: 0000105634
P/B 8.47
P/E 25.01
P/S 1.74
Market Cap 28.27 Bn
ROIC (Qtr) 29.60
Div Yield % 0.20
Rev 1y % (Qtr) 16.35
Total Debt (Qtr) 424.62 Mn
Debt/Equity (Qtr) 0.13

About

EMCOR Group, Inc., a leading specialty contractor in the United States, operates under the ticker symbol EME. The company is active in the electrical and mechanical construction and facilities services, building services, and industrial services sectors. With over 38,300 employees, EMCOR is one of the largest specialty contractors in the United States, offering its services in various countries and regions. EMCOR's business activities encompass electrical and mechanical construction and facilities services, building services, and industrial services....

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Analysis

Pros

  • Strong operating cash flow of 1.25B provides robust 2.94x coverage of total debt 424.62M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 655.10M provide 6.84x coverage of short-term debt 95.84M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 6.22B provides 14.66x coverage of total debt 424.62M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 1.25B provides exceptional 43.04x coverage of interest expenses 28.98M, showing strong debt service capability.
  • Operating cash flow of 1.25B provides strong 75.26x coverage of stock compensation 16.57M, indicating sustainable incentive practices.

Cons

  • Operating cash flow of 1.25B barely covers its investment activities of (1.03B), with a coverage ratio of -1.21, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 1.25B provides thin coverage of dividend payments of (45.33M) with a -27.51 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 655.10M provide limited coverage of acquisition spending of (939.46M), which is -0.70x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • High receivables of 4.10B relative to inventory of 105.41M (38.94 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Free cash flow of 1.15B represents just -412.92x of debt issuance (2.79M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Peer Comparison

Companies in the Engineering & Construction
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 PWR Quanta Services, Inc. 65.02 Bn 63.86 2.39 6.02 Bn
2 FER Ferrovial SE 48.37 Bn 14.34 5.08 -
3 FIX Comfort Systems Usa Inc 34.25 Bn 40.89 4.12 0.39 Bn
4 EME EMCOR Group, Inc. 28.27 Bn 25.01 1.74 0.42 Bn
5 MTZ Mastec Inc 17.18 Bn 51.88 1.25 2.77 Bn
6 APG APi Group Corp 16.45 Bn 105.48 2.15 3.05 Bn
7 J Jacobs Solutions Inc. 16.43 Bn 56.79 1.37 2.71 Bn
8 ACM Aecom 13.10 Bn 23.31 0.81 3.23 Bn

Industry Comparisons

Current Valuation

Metric Value Industry Percentile
EV to Assets 3.29 1.60
EV to Cash from Ops. 22.81 6.21
EV to Debt 67.00 12.02
EV to EBIT 18.11 16.63
EV to EBITDA 16.74 13.11
EV to Free Cash Flow [EV/FCF] 24.67 64.21
EV to Market Cap 1.01 1.27
EV to Revenue 1.75 1.63
Price to Book Value [P/B] 8.47 5.92
Price to Earnings [P/E] 25.01 28.08

Dividend Metrics

Metric Value Industry Percentile
Dividend Coverage Ratio 24.94 2.56
Dividend Payout Ratio % 4.00 17.64
Dividend per Basic Share 1.00 0.24
FCF Dividend Payout Ratio % 3.88 8.25
Interest Coverage 54.22 80.17

Growth Metrics

Metric Value Industry Percentile
Capex Growth (1y) % -25.16 -167.27
Cash and Equivalents Growth (1y) % -36.74 637.93
Dividend Growth (1y) % 7.53 2.92
EBIAT Growth (1y) % 23.67 92.73
EBITDA Growth (1y) % 23.63 8.03
EBIT Growth (1y) % 23.03 85.41
EBT Growth (1y) % 21.37 42.19
EPS Growth (1y) % 26.15 43.98
FCF Growth (1y) % -10.40 -20.57
Gross Profit Growth (1y) % 19.92 32.55

Liquidity Ratios

Metric Value Industry Percentile
Asset Utilization Ratio 1.88 1.14
Cash Payout Ratio 0.03 0.05
Cash Ratio 0.14 0.38
Current Ratio 1.19 1.54
Debt to Equity Ratio 0.13 0.89
Interest Cover Ratio 54.22 80.17
Times Interest Earned 54.22 80.17

Profitability

Metric Value Industry Percentile
EBITDA Margin % 10.70 0.40
EBIT Margin % 9.67 -2.30
EBT Margin % 9.49 -4.58
Gross Margin % 19.40 20.40
Net Profit Margin % 7.00 -5.95