EMCOR Group, Inc. – Value Analysis (NYSE:EME) : September 16, 2016

Capitalcube gives EMCOR Group, Inc. a score of 53.

Our analysis is based on comparing EMCOR Group, Inc. with the following peers – Quanta Services, Inc., Comfort Systems USA, Inc., Dycom Industries, Inc., IES Holdings, Inc., Tutor Perini Corporation, Fluor Corporation and United Technologies Corporation (PWR-US, FIX-US, DY-US, IESC-US, TPC-US, FLR-US and UTX-US).

Investment Outlook

EMCOR Group, Inc. has a fundamental score of 53 and has a relative valuation of UNDERVALUED.

Fundamental Score

Access our research and ratings on EMCOR Group, Inc.

Company Overview

  • Considering peers, relative outperformance over the last year and the last month suggest a leading position.
  • EMCOR Group, Inc.’s current Price/Book of 2.23 is about median in its peer group.
  • The market expects EME-US to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • EME-US‘s relative asset efficiency and net profit margins are both around the median level.
  • Changes in annual earnings (relative to peers) are better than the change in its revenues (relative to peers), implying the company is focused more on earnings.
  • EME-US‘s return on assets currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • The company’s margins are around the peer medians and do not suggest any benefit from a pricing or an operating cost advantage versus peers.
  • While EME-US‘s revenues growth has been below the peer median in the last few years, the market still gives the stock a P/E ratio that is around peer median and seems to see the company as a long-term strategic bet.
  • The company’s capital investment seems appropriate for a business with peer median returns.
  • EME-US has the financial and operating capacity to borrow quickly.

Access our research and ratings on EMCOR Group, Inc.

Leverage & Liquidity

EME-US has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 17.14% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 18.37%), and a well-cushioned interest coverage level of 30.66x, EME-US can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • All 7 peers for the company have an outstanding debt balance.

EME-US has maintained its Quick & Able profile from the recent year-end.

  • EME-US‘s interest coverage is greater than (but within one standard deviation of) its five-year average interest coverage of 29.31x.
  • The decrease in its interest coverage to 30.66x from 32.18x (in 2015) was also accompanied by a decrease in its peer median during this period to 17.33x from 19.05x.
  • EME-US‘s debt-EV is its highest relative to the last five years and compares to a low of 8.30% in 2012.
  • The increase in its debt-EV to 17.14% from 11.53% (in 2015) was also accompanied by an increase in its peer median during this period to 18.37% from 15.70%.
  • Relative to peers, debt-EV rose 2.93 percentage points.

Access the detailed analysis for EMCOR Group, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Quanta Services, Inc. 10.88 1.86 17.95 87.09
Comfort Systems USA, Inc. 3.23 1.33 46.27 201.87
Dycom Industries, Inc. 19.61 2.64 7.13 47.43
IES Holdings, Inc. 10.99 1.56 22.76 163.69
Tutor Perini Corporation 44.1 1.76 2.78 17.19
Fluor Corporation 24.59 1.5 16.71 40.27
United Technologies Corporation 21.79 1.26 8.09 31.02
EMCOR Group, Inc. 17.14 1.54 30.66 62.48
Peer Median 18.37 1.55 17.33 54.96
Best In Class 3.23 2.64 46.27 201.87

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Company Profile

EMCOR Group, Inc. provides electrical and mechanical construction and facilities services. The company provides services to commercial, industrial, utility, and institutional customers. It designs, integrates, installs, starts-up, operates, and maintains various electrical and mechanical systems. The company operates through the following segments: United States Electrical Construction & Facilities Services, United States Mechanical Construction & Facilities Services, United States Building Services, United States industrial services and United Kingdom Building Services. The United States Electrical Construction & Facilities Services segment is involved in electrical power transmission and distribution, premises electrical and lighting systems, and low-voltage systems. The United States Mechanical Construction & Facilities Services segment provides systems for heating, ventilation, air conditioning, refrigeration and clean-room process ventilation, fire protection, plumbing, process and high-purity piping, controls and filtration, water and wastewater treatment and central plant heating and cooling, cranes and rigging, mill righting, steel fabrication, erection, and welding. The United States Building Services and United Kingdom Building Services segments principally consist of those operations which provide a portfolio of services needed to support the operation and maintenance of customers facilities, including commercial and government site-based operations and maintenance; facility maintenance and services, including reception, security and catering services; outage services to utilities and industrial plants; military base operations support services; mobile maintenance and services; floor care and janitorial services; landscaping, lot sweeping and snow removal; facilities management; vendor management; call center services; installation and support for building systems; program development, management and maintenance for energy systems; technical consulting and diagnostic services; infrastructure and building projects for federal, state and local governmental agencies and bodies; and small modification and retrofit projects, which services are not generally related to customers construction programs. The United States Industrial Services segment principally consists of those operations which provide industrial maintenance and services, including those for refineries and petrochemical plants, including on-site repairs, maintenance and service of heat exchangers, towers, vessels and piping; design, manufacturing, repair and hydro blast cleaning of shell and tube heat exchangers and related equipment; refinery turnaround planning and engineering services; specialty welding services; overhaul and maintenance of critical process units in refineries and petrochemical plants; and specialty technical services for refineries and petrochemical plants. The company was founded in 1987 and is headquartered in Norwalk, CT.

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