EMCOR GROUP INC (NYSE:EME) – A Quality Stock with Strong Fundamentals

EMCOR GROUP INC (NYSE:EME) stands out as a potential candidate for quality investors, meeting key criteria for profitability, financial health, and efficient capital allocation. The company, which provides electrical and mechanical construction services, has demonstrated consistent performance and strong operational metrics.

Key Strengths of EMCOR GROUP INC

• High Return on Invested Capital (ROIC): With an ROIC (excluding cash and goodwill) of 176.04%, EME significantly outperforms industry peers, indicating efficient use of capital.
• Strong Profitability: The company has an EBIT growth rate of 23.80% over the past five years, reflecting improving operational efficiency.
• Low Debt Burden: EME’s debt-to-free cash flow ratio is 0.005, meaning it could repay its debt almost immediately with available cash flow.
• Profit Quality: The five-year average profit quality stands at 203.38%, showing that earnings are consistently converted into cash.
• Solid Margins: Operating margin (9.23%) and profit margin (6.91%) are above industry averages, with both showing positive growth trends.

Fundamental Analysis Summary

The fundamental report assigns EME a rating of 7 out of 10, highlighting its strong profitability, low debt, and solid growth. Key takeaways include:

• Profitability: High ROIC (27.50%), ROE (34.28%), and consistent earnings growth.
• Financial Health: Excellent solvency with an Altman-Z score of 6.13 and minimal debt.
• Valuation: While P/E (20.47) is slightly above industry average, the company’s strong fundamentals justify the premium.

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Disclaimer

This is not investing advice. Always conduct your own research before making investment decisions.