Following stellar third quarter results that included a positive
earnings surprise, shares of
Comfort Systems USA Inc.
) are currently hovering near its 52-week high of $13.05. Earnings
for this Zacks #1 Rank (Strong Buy) provider of business solutions
are expected to increase 126.7% in 2012 and 25.9% in 2013. With the
growth trajectory expected to continue thanks to a diligent
execution of its operating strategy, Comfort Systems looks like a
solid momentum pick.
Strong Third Quarter
On November 1, Comfort Systems reported strong third quarter
results with a 115.3% year-over-year surge in net income to 15
cents per share. This also beat the Zacks Consensus Estimate by
Total revenue increased 2.3% year over year to $335.5 million. The
company recorded a positive free cash flow of $13.8 million,
compared to a negative $0.8 million in the year-ago quarter.
Same-store backlog improved to $570.4 million compared to $636.1
million in the prior-year quarter.
Surge in Earnings Estimate Revisions
Over the past 60 days, the Zacks Consensus Estimate for 2012
increased 3.0% to 34 cents, suggesting a year-over-year increase of
126.7%. The Zacks Consensus Estimate for 2013 is up 2.4% over the
same period to 43 cents, representing growth of 25.9% on a
Comfort Systems' valuation looks a bit expensive on a
price-to-earnings (P/E) basis. Shares of Comfort Systems are
currently trading at a forward P/E of 29.58x versus the peer group
average of 20.00x. A healthy earnings growth prospect in the
current year warrants the premium valuation of the company.
However, on a price-to-book (P/B) basis, Comfort Systems is
currently trading at 1.66x versus 2.19x for the peer group average.
Since November 27, 2012, Comfort Systems shares have fared better
than the simple moving average for 50 days or SMA (50). The
continuous uptrend in stock prices since late last year offers an
enticing upside potential going forward. Volume averages 114K
Comfort Systems offers installation, maintenance, repair and
replacement services for heating, ventilation, and air conditioning
(HVAC) systems in the mechanical services industry. The company
designs, installs, and fine-tunes HVAC systems for a diverse
portfolio of commercial, industrial and institutional customers,
including downtown high-rises, hospitals, universities, hotels,
factories and industrial plants. It also offers specialized
application services, such as building automation control systems,
fire protection, process cooling, electronic monitoring, and
process piping, in addition to providing electrical and plumbing
services. The company currently has a market cap of $467.9 million.
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