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EMCOR Group, Inc. (EME) Hits Fresh High: Is There Still Room to Run?

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Have you been paying attention to shares of Emcor Group (EME - Free Report) ? Shares have been on the move with the stock up 9.3% over the past month. The stock hit a new 52-week high of $403.69 in the previous session. Emcor Group has gained 86.9% since the start of the year compared to the 20.2% move for the Zacks Construction sector and the 66.6% return for the Zacks Building Products - Heavy Construction industry.

What's Driving the Outperformance?

The stock has a great 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 July 25, 2024, Emcor Group reported EPS of $5.25 versus consensus estimate of $3.68.

Valuation Metrics

While Emcor Group has moved to its 52-week high in the recent past, investors need to be asking, what is next for the company? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

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. The idea behind the style scores is to help investors 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 A and D, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 20.7X current fiscal year EPS estimates, which is a premium to the peer industry average of 20X. On a trailing cash flow basis, the stock currently trades at 25.1X versus its peer group's average of 12.2X. 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 consider the stock's Zacks Rank, 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 meets the list of requirements. Thus, it seems as though Emcor Group shares could still be poised for more gains ahead.

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 Great Lakes Dredge & Dock Corporation (GLDD - Free Report) . GLDD has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of B, and a Momentum Score of C.

Earnings were strong last quarter. Great Lakes Dredge & Dock Corporation beat our consensus estimate by 266.67%, and for the current fiscal year, GLDD is expected to post earnings of $0.80 per share on revenue of $749.53 million.

Shares of Great Lakes Dredge & Dock Corporation have gained 7.6% over the past month, and currently trade at a forward P/E of 12.25X and a P/CF of 12.32X.

The Building Products - Heavy Construction industry is in the top 4% of all the industries we have in our universe, so it looks like there are some nice tailwinds for EME and GLDD, even beyond their own solid fundamental situation.


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