EMCOR GROUP INC (NYSE:EME) Identified as a Top Quality Stock by Caviar Cruise Screen

EMCOR GROUP INC (NYSE:EME) has been identified by the Caviar Cruise stock screening method, a strategy based on quality investing principles. This approach focuses on finding companies with solid historical results, strong profitability, good financial condition, and lasting growth, characteristics that make them appropriate for long-term, buy-and-hold investment strategies. The Caviar Cruise screen assesses measures like revenue and EBIT growth, return on invested capital, debt management, and profit quality to select for businesses that show operational superiority and strength.

Financial Performance and Growth

EMCOR displays a persuasive history of growth and profitability, main supports of the quality investing structure. While the 5-year revenue growth number was not available in the screen output, the company’s recent fundamental data and analyst forecasts point to a solid upward path. More importantly, EME’s EBIT has grown at a compound annual rate of 23.8% over the past five years, greatly surpassing the screen’s minimum requirement of 5%. This shows not only an increase in size but also better operational effectiveness and possible pricing strength, a sign of quality firms that can turn higher revenues into even larger profits.

Profitability and Capital Effectiveness

A main element of the Caviar Cruise strategy is the focus on high returns on invested capital, which shows management’s skill in using resources productively. EMCOR’s ROIC excluding cash, goodwill, and intangibles is at a very high 99.66%, greatly exceeding the screen’s standard of 15%. This shows that the company creates significant profit compared to the capital put into its main operations, a signal of a lasting competitive edge and productive management, important features for quality investors looking for long-term compounders.

Financial Condition and Cash Flow Quality

The screen favors companies with solid balance sheets and high-quality earnings. EME performs very well in these areas with a debt-to-free cash flow ratio of only 0.21, meaning it could in theory pay off all its debt in a small part of a year using its present cash flow. This careful financial setup lowers risk and allows for flexibility for strategic investments, share buybacks, or dividend increases. Also, the company’s 5-year average profit quality, measured as free cash flow to net income, is 203.38%, much higher than the 75% standard. This shows that EME regularly turns accounting profits into actual cash, highlighting the durability and dependability of its earnings.

Fundamental Analysis Summary

A look at EMCOR’s detailed fundamental report supports its fit with quality investing standards. The report gives EME a solid total score of 8 out of 10, reflecting high performance in profitability and financial condition, along with good growth. Important points include:

• Profitability measures such as return on equity (36.22%) and operating margin (9.50%) are some of the top in the construction and engineering industry.
• The company has a background of steady earnings and cash flow creation over the past five years.
• Balance sheet strength is clear through low debt amounts and high solvency scores.
• Growth stays strong, with analysts predicting continued revenue and earnings increases.

Valuation Thoughts

While the Caviar Cruise screen does not use valuation filters, it is important to state that EME trades at a P/E ratio similar to the S&P 500 average. Considering the company’s high quality features, including better profitability, growth, and financial steadiness, this valuation seems fair for investors concentrated on long-term business quality instead of short-term price reductions.

Conclusion

EMCOR Group stands as a persuasive option for quality-focused investors, satisfying strict standards related to growth, profitability, financial power, and cash flow dependability. Its solid industry position, consistent results, and productive capital allocation match well with the ideas of the Caviar Cruise screening method. For investors wanting to research other companies that pass similar quality filters, more results are available using the [Caviar Cruise stock screen](https://www.chartmill.com/stock/stock-screener?sid=673&f=sl_rev5y_5_X,sl_roicNg_15_X,sl_debt2fcf_X_5,sl_profitQ5y_75_X,sl_ebit5yGrowth_5_X,exch_us&v=22&s=ta&sd=DESC&cpl=2&bc=false&nw=1&o1=3&op1=200,16711680&o2=3&op2=50,255&o3=1&cf=(ebit5yGrowth%3Erev5y)>.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any security. Investors should conduct their own research and consult with a financial advisor before making investment decisions.