EMCOR Group, Inc. (NYSE: EME)

Sector: Industrials Industry: Engineering & Construction CIK: 0000105634
Market Cap 29.29 Bn
P/B 8.78
P/E 25.91
P/S 1.80
ROIC (Qtr) 29.60
Div Yield % 0.19
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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Price action

Investment thesis

Bull case

  • 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.

Bear case

  • 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.

Segments Breakdown of Revenue (2024)

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. 62.71 Bn 61.60 2.31 6.02 Bn
2 FER Ferrovial SE 48.08 Bn 14.25 5.05 -
3 FIX Comfort Systems Usa Inc 35.76 Bn 42.69 4.30 0.39 Bn
4 EME EMCOR Group, Inc. 29.29 Bn 25.91 1.80 0.42 Bn
5 APG APi Group Corp 17.37 Bn 111.36 2.27 3.05 Bn
6 MTZ Mastec Inc 17.01 Bn 51.39 1.24 2.77 Bn
7 J Jacobs Solutions Inc. 16.94 Bn 58.56 1.41 2.71 Bn
8 BLD TopBuild Corp 13.35 Bn 23.52 2.55 3.09 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.41 1.61
EV to Cash from Ops. EV/CFO 23.63 6.94
EV to Debt EV to Debt 69.42 11.81
EV to EBIT EV/EBIT 18.76 17.80
EV to EBITDA EV/EBITDA 17.34 13.77
EV to Free Cash Flow [EV/FCF] EV/FCF 25.56 55.77
EV to Market Cap EV to Market Cap 1.01 1.20
EV to Revenue EV/Rev 1.81 1.65
Price to Book Value [P/B] P/B 8.78 5.81
Price to Earnings [P/E] P/E 25.91 35.89
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 24.94 2.51
Dividend Payout Ratio % Div Payout % (Qtr) 4.00 25.81
Dividend per Basic Share Div per Share (Qtr) 1.00 0.24
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 3.88 4.05
Interest Coverage Int. cover (Qtr) 54.22 80.15
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -25.16 -166.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -36.74 637.72
Dividend Growth (1y) % Div 1y % (Qtr) 7.53 5.87
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 23.67 92.47
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 23.63 8.04
EBIT Growth (1y) % EBIT 1y % (Qtr) 23.03 85.34
EBT Growth (1y) % EBT 1y % (Qtr) 21.37 42.07
EPS Growth (1y) % EPS 1y % (Qtr) 26.15 43.76
FCF Growth (1y) % FCF 1y % (Qtr) -10.40 -20.95
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 19.92 32.46
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.88 1.14
Cash Payout Ratio Cash Payout (Qtr) 0.03 0.05
Cash Ratio Cash Ratio (Qtr) 0.14 0.38
Current Ratio Curr Ratio (Qtr) 1.19 1.55
Debt to Equity Ratio Debt/Equity (Qtr) 0.13 0.89
Interest Cover Ratio Int Coverage (Qtr) 54.22 80.15
Times Interest Earned Times Interest Earned (Qtr) 54.22 80.15
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 10.70 0.40
EBIT Margin % EBIT Margin % (Qtr) 9.67 -2.31
EBT Margin % EBT Margin % (Qtr) 9.49 -4.59
Gross Margin % Gross Margin % (Qtr) 19.40 20.38
Net Profit Margin % Net Margin % (Qtr) 7.00 -5.96