EMCOR Group Inc. EME has been gaining from its diversified business, which enables it to tap opportunities and neutralize the operating risks associated with the economic downcycles. In the last reported quarter, the company’s U.S. industrial services and U.K building services segments performed well and were the chief growth drivers. Additionally, EMCOR’s electrical construction business continued to perform impressively.
Moreover, EMCOR has been dedicated towards enhancing shareholders wealth via share repurchases and dividends. In 2014, the company bought back around 4.8 million common shares for about $206.0 million. EMCOR currently has $166.5 million available under its share repurchase authorization. Also, EMCOR paid an annual dividend of 32 cents in 2014, much higher than 18 cents distributed in 2013.
However, EMCOR’s financials have been negatively impacted by slow recovery in the non-residential construction sector, as the company derives a considerable amount of its total revenue from this market. Also, the company has been witnessing additional losses owing to the order changes from the Federal government, as the actual costs were greater than the estimated ones.
Moreover, volatility in oil prices may impact EMCOR’s growth momentum in the future, as the company’s business is primarily downstream-focused. Moreover, management projects some upstream challenges in its construction business as its clients are mainly large E&P-focused companies. Persistence of such problem in the oil and gas market may pose a threat for EMCOR’s top-line growth.
To gain deeper insight into EMCOR, you can refer to our updated research report, which was issued on Mar 11, 2015.
Over the last 30 days, the Zacks Consensus Estimate for 2015 and 2016 earnings per share tumbled by 15 cents and 30 cents to $3.20, respectively. Consequently, the stock currently has a Zacks Rank #4 (Sell).
Stocks that Warrant a Look
Better-ranked stocks worth considering in the sector include Willdan Group, Inc. WLDN, Dycom Industries Inc. DY Pernix Group Inc PRXG. While Dycom and Willdan Group carries a Zacks Rank #1 (Strong Buy), Pernix has a Zacks Rank #2 (Buy).
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