EME Stock Study (1-15-26)
Posted by Mark on June 13, 2025 at 06:43 | Last modified: January 18, 2026 11:52I recently studied EMCOR Group, Inc. (EME, $660.73).
M* writes:
> EMCOR Group Inc is a specialty contractor in the United States
> and a provider of electrical and mechanical construction and
> facilities services, building services, and industrial services.
> Its services are provided to a broad range of commercial,
> technology, manufacturing, industrial, healthcare, utility, and
> institutional customers through approximately 100 operating
> subsidiaries… Geographically, its key revenue is derived from
> the United States.
Over the past decade, this large-size company has grown sales and EPS at annualized rates of 8.1% and 22.1%, respectively. Lines are mostly up, straight, and narrowing except for sales+EPS dip in ’20. Shares outstanding decrease 26.1% (linearly 3.3% per year). 10-year EPS R^2 is 0.73 and Value Line (VL) gives an Earnings Predictability score of 80.
Over the past decade, PTPM leads peer and industry averages while climbing from 4.1% (’15) to 9.5% (’24) with last-5-year mean of 5.9%. ROE leads peer and industry averages while climbing from 11.0% (’15) to 35.7% (’24) with last-5-year mean of 21.7%. Debt-to-Capital is less than peer and industry averages while falling from 17.8% (’15) to 10.6% (’24) with last-5-year mean of 16.8%.
Quick Ratio is 1.1 and Interest Coverage 365 (Dec 2024) per M* who assigns “Narrow” [quantitative] Economic Moat and gives a B grade for Financial Health (per BetterInvesting website). VL rates the company B++ for Financial Strength.
With regard to sales growth:
- YF gives YOY ACE 15.0% and 6.4% for ’25 and ’26, respectively (based on 9 analysts).
- Zacks gives YOY ACE 15.0% and 5.9% for ’25 and ’26, respectively (2 analysts).
- VL projects 7.3% annualized growth from ’24-’29.
- [First time that I’ve seen] CFRA (quantitative report) offers no annualized ACE.
- M* gives 2-year ACE of 9.9% per year.
My 5.0% forecast is below the range.
With regard to EPS growth:
- MarketWatch projects 15.1% and 13.4% per year for ’24-’26 and ’24-’27, respectively (based on 10 analysts).
- Nasdaq.com reports ACE 8.6% YOY and 7.2% per year for ’26 and ’25-’27 (3 / 3 / 2 analysts for ’25 / ’26 / ’27).
- Seeking Alpha projects 4-year annualized growth of 29.0%.
- Finviz gives ACE 5-year annualized growth of 12.6% (6).
- YF gives YOY ACE growth of 17.9% and 9.4% for ’25 and ’26, respectively (6).
- Zacks gives YOY ACE growth of 17.3% and 8.6% for ’25 and ’26, respectively (3).
- VL projects 10.8% annualized growth from ’24-’29.
- [First time that I’ve seen] CFRA (quantitative report) offers no annualized ACE.
My 10.0% forecast is below the long-term estimate range (mean of only three: 17.5%). Initial value is ’24 EPS of $21.52/share rather than 2025 Q3 EPS of $24.87 (TTM).
My Forecast High P/E is 20.0. Over past 10 years, high P/E ranges from 16.3 in ’19 to 24.7 in ’24 (excluding upside outlier of 39.0 in ’20) with a last-5-year mean of 20.1 and a last-5-year-mean average P/E of 16.3. I am near the last-5-year mean to avoid study from being INVALID [otherwise I would choose 16.0].
My Forecast Low P/E is 9.0. Over past 10 years, low P/E falls from 14.6 in ’15 to 9.7 in ’24 with a last-5-year mean of 12.4. I am forecasting below the range.
My Low Stock Price Forecast (LSPF) is $320.00. Default ($193.70) based on initial value given above is unreasonably low at 70.7% less than previous close and 39.6% less than 52-week low. My (arbitrary) selection is 51.6% and 0.3% less, respectively.
Over the past 10 years, Payout Ratio (PR) ranges from 4.3% in ’24 to 13.3% in ’20 with a last-5-year mean of 7.4%. I am forecasting below the range at 4.0%.
These inputs land EME in the SELL zone with a U/D ratio of 0.1. Total Annualized Return (TAR) is 1.2%.
PAR (using Forecast Average—not High—P/E) of -5.0% is unthinkable for an investment candidate. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR but even that is far below than the risk-free rate (T-Bills).
To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 53 studies in the past 90 days (my study and 30 other outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 9.0%, 11.1%, 23.4, 12.4, and 7.4% respectively. I am lower across the board. VL projects a future average annual P/E of 18.0 that is greater than MS (17.9) and greater than mine (14.5).
MS high / low EPS are $40.42 / $23.95 versus my $34.66 / $21.52 (per share). My high EPS is less due mainly to a lower growth rate. VL high EPS of $35.90 is in the middle.
MS LSPF of $315.00 implies a Forecast Low P/E of 13.2 versus the above-stated 12.4. MS LSPF is 6.1% greater than the default $23.95/share * 12.4 = $296.98 resulting in more aggressive zoning. MS LSPF is 1.6% less than mine, however.
MOS is moderate in the study because my growth rates are below historical/analyst/MS averages. Also supporting this assessment is MS TAR exceeding mine by 7.5% per year. I had to increase my forecast P/E range in order to keep the study valid, though.
With regard to valuation, PEG is 2.4 per my projected P/E [M* has 0.46—quite puzzling since they currently rate stock one star and say it trades at a 22% premium]. Relative Value [(current P/E) / 5-year-mean average P/E] is extremely rich at 1.6. “Quick and dirty DCF” says overvalued by 14%.
Although EME comes up on the BetterInvesting A-list stock screen (meeting criteria for quality and growth), it is well extended from a buy point. I clearly see this in looking at the price chart but I wanted to get some idea when it might be a decent candidate for the future.
Per U/D, EME is a BUY under $413/share. BI TAR criterion would be met [693.2 / ((14.67 / 100 ) +1 ) ^ 5] ~ $350 given a forecast high price ~$693.
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