Strong third-quarter 2012 earnings results and rising
Emcor Group Inc.
) to achieve a Zacks #1 Rank (Strong Buy) on January 1, 2013.
This electrical and mechanical construction company has
outperformed the Zacks Consensus Estimates in the last three
quarters by an average 11.7%.
One of the company's peers,
Chicago Bridge & Iron
) currently attained a Zacks #2 Rank (Buy) following 14% earnings
growth in its third quarter 2012. Chicago Bridge's earnings of 82
cents also surpassed the Zacks Consensus Estimate by 1.2%.
The Rank Drivers
Sequential backlog growth, organic revenue growth and strong
profitability amid challenging market conditions were the rank
drivers for this stock.
On October 25, 2012, Emcor Group reported robust third quarter
results with earnings of 59 cents a share surpassing the Zacks
Consensus Estimate by 18% or 9 cents a share. Further, earnings
were also up 25.5% year over year.
Consolidated revenues for the third quarter grew 8.4% year
over year to $1.61 billion, while organic growth was 6.5%. The
year-over-year increase in revenue was driven by growth across
Gross margin during the quarter declined a marginal 5 basis
points (bps) to 12.6%. Operating margin grew 46 bps year over
year helped by cost control measures.
Further, on December 7, 2012, the board of directors of Emcor
declared a 20% increase in the quarterly dividend to 6 cents a
Emcor is scheduled to release its fourth quarter 2012 results
on February 16, 2013.
Preliminary Results Drive Estimates
Following the strong earnings results, earnings estimates
moved higher in the past 90 days. The Zacks Consensus Estimate
for fiscal 2013 climbed 5.1% to $2.08 per share, as all the 6
estimates were raised. This represents year-over-year growth of
The Zacks Consensus Estimate for fiscal 2014 increased 2.5% to
$2.44 per share over the same time frame, as 4 out of 6 estimates
climbed, reflecting a year-over-year increase of 17.2%.
Emcor currently trades at a forward P/E of 16.4x,
significantly above the peer group average of 13.8x. On a
price-to-book basis, the shares trade at 1.72x, reflecting a
premium of 2.4% to the peer group average of 1.68x. Given the
company's strong fundamentals, the premium valuation is
Founded in 1966 and headquartered in Norwalk, Connecticut,
Emcor is one of the largest electrical and mechanical
construction and facilities services firms in the U.S. and the
U.K. Emcor provides services to a broad range of commercial,
industrial, utility and institutional customers through
approximately 70 operating subsidiaries and joint venture
CHICAGO BRIDGE (CBI): Free Stock Analysis
EMCOR GROUP INC (EME): Free Stock Analysis
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